As it’s become more expensive to invest in the buy-to-let market over the last few years, it’s increasingly important for landlords to find areas with high rental growth.
Real estate company Savills forecasts average rents in the UK will grow by 6% in 2024, driven by a continued imbalance between supply and demand.
However, this is an average figure. There are some areas where annual rental growth has soared and others where rental growth has declined.
It's worth noting that the average London rent is £2,627 a month, so any prices above this amount could impact rental growth in that area.
Rightmove has revealed the areas in London with the highest and lowest asking rent growth over the last year.
Which 5 areas in London have the highest rental growth?
First, we’ll reveal the areas in London that have benefitted from the highest rental growth.
With an eyewatering 23% annual growth in asking rents for new tenants, Hillingdon tops the list.
As of October 2023, the average advertised rent was £1,970.
Hillingdon is an attractive place to rent as it’s only an hour from London by public transport and offers access to green spaces, including Colne Valley Regional Park.
The council has also recently green-lit some big redevelopment plans in Yiewsley, Hillingdon, which include a new library, more homes and a community facility.
In second place is Newham, boasting a 20% annual growth in asking rents, with the average rent in October 2023 standing at £2,171.
Newham is ideal for commuters as you can travel into London within 40 minutes by public transport.
There are also a lot of notable places nearby, including the Queen Elizabeth Olympic Park and Westfield Stratford City shopping centre, which is the largest in Europe.
Harrow has experienced a 19% annual growth in asking rent, with an average advertised rent of £2,206 as of October 2023.
The town is only a 40-minute journey into central London and has a lot of shops on its high street, as well as many green spaces to enjoy.
4. Barking and Dagenham
Barking and Dagenham has benefitted from asking rents growing by 18%, with an average advertised rent of £1,826 in October.
It’s only a short journey of under half an hour into London by public transport. The area also has plenty of parks and shops nearby, as well as the Vicarage Field shopping centre.
With an annual growth in asking rents of 18%, Redbridge has an average advertised rent of £2,056 as of October 2023.
Similar to other areas in London, it has many green spaces, including Fairlop Waters Country Park, which offers many family-friendly events. The area also has many high-quality schools and housing.
You can also travel to London within 45 minutes.
Which 5 areas in London have the lowest rental growth?
Now we’ll look at the areas in London that haven’t fared well with rental growth.
While these areas have suffered declines in rental growth, this may not necessarily reflect future growth potential.
1. Kentish Town
Kentish Town has suffered a striking 12% annual decline in asking rents.
Despite this, the average advertised rent is £2,799 as of October 2023.
Kentish Town is an appealing place to live as it is near attractions such as London Zoo and Regent’s Park, and it is only 15 minutes from central London.
Richmond has experienced an 11% fall in asking rent for new tenants, yet the advertised rent in October was a high £3,531 a month.
While you can get into London in half an hour and have Richmond Park and Kew Gardens on your doorstep, the premium you need to pay may simply be too much for renters.
3. Muswell Hill
Muswell Hill may be an affluent area with Alexandra Palace nearby, but this isn’t enough to stop asking rents tumbling 10%.
As of October, the average rent is £2,759, which is higher than the London average.
Next on the list is Camden, where annual asking rents have dropped 4%.
While Camden is popular due to its central location in the city and various attractions, the average advertised rent hit £4,292 in October.
This is over 60% higher than the London average, which could shed some light on why rents have fallen.
5. Canary Wharf
Finally, in Canary Wharf, the average asking rent for new tenants has declined by 1%.
Despite this, the average advertised rent in October was £2,920 – nearly £300 higher than the London average.
Demand in Canary Wharf is likely affected by less demand for office space due to more remote working. This may also attract fewer commuters hoping for an easy journey to work.
Financial advice is vital if you're planning to become a landlord.
If you’re considering buying a buy-to-let property, it’s worth getting professional financial advice whether you’re looking for tax relief or the best mortgage for your needs.