London flat prices fell 6.9% as rents rose 36.5% — but many landlords still need a tougher yield test

London flat and maisonette prices fell 6.9% over the past decade while rents rose 36.5% — a striking gap that may improve gross yields on paper, but not necessarily the cash left in a landlord’s account.

That headline comes from Brickview analysis of HM Land Registry and ONS data, as reported by Landlord Today. It is useful evidence of how the market has moved, but it is not a forecast and it does not mean every London flat is now a better investment.

Brickview says the same broad pattern held across every region of England and Wales, with rents for flats and maisonettes rising faster than sale prices over 10 years. It reported the North West as the strongest region for both price growth and rent growth, while the North East recorded the highest gross yield. The London takeaway is clear: investors cannot rely on the old assumption that the capital will justify weaker income returns.

Gross yield is where the analysis starts, not where it ends

For London flats, gross yield and net return are often miles apart. Higher rents help, but landlords still have to absorb mortgage interest, service charges, insurance, repairs, management fees, licensing costs and voids. In many blocks, major works risk can do more damage to returns than a modest rent rise can repair.

That is why postcode-level underwriting matters. A flat in Newham, Croydon or Waltham Forest may look attractive on a gross basis, but a similar-looking property in a block with steep service charges or looming Section 20 works can produce a very different result.

The real pressure point is refinancing

For many landlords, the key question is not whether rents are up over 10 years. It is whether the property still works when the mortgage resets.

If a deal expires in the next 6 to 12 months, rerun the figures now using a higher-rate scenario, a realistic void assumption and the actual rent achieved, not the best asking rent on the portals. A flat that was comfortable at sub-4% borrowing costs can look far less robust once finance moves closer to 5% or 6%.

Portfolio owners should test three cases: current rent, a lower rent to secure a faster let, and a short void before reletting. That gives a truer picture of debt cover than headline yield ever will.

Rising rents also raise affordability risk

A 36.5% increase in rents is good news only if tenants can sustain it. In parts of London, affordability is now the constraint. Push too hard on re-let pricing and the result may be a longer void, higher turnover or arrears risk rather than stronger income.

That matters most for one- and two-bed flats, where the tenant pool is often highly payment-sensitive. In this market, a retention-led renewal slightly below top open-market rent can outperform an aggressive increase that leads to vacancy.

Buyers should underwrite the building, not just the flat

Landlords looking to buy into softer London values should treat this dataset as a screening tool, not a green light. Before exchange, model the investment with all recurring costs included:

• mortgage payments
• service charge
• ground rent, where applicable
• insurance
• repairs and maintenance
• management fees
• licensing costs
• accountancy and compliance costs

For leasehold flats, investors should also review Section 20 exposure, lease length, reserve fund pressure and any cladding or remediation issues. Those costs can wipe out a seemingly healthy yield.

Market data changes nothing on compliance

None of this alters a landlord’s existing obligations. Gas safety checks, EICRs, smoke and carbon monoxide alarm rules, deposit protection, Right to Rent, EPC compliance and licensing still apply, and borough licensing rules can vary sharply across London.

The bigger editorial point is simple: this is market analysis, not policy change. It does not create a new deadline, tax break or rent rule. Landlords should be careful not to confuse historic performance with future certainty.

What landlords should do now

Within the next month, rerun cash flow for each London flat using actual rent received, full annual costs and at least a one-month void assumption.

Before any refinance, stress-test the property at a higher rate and with weaker letting assumptions.

Before any purchase, assess the block-level risks with the same care as the flat itself.

Rentals & Sales can help south-west London landlords benchmark achievable rents, pressure-test flat-by-flat net yields and spot the service charge or licensing issues most likely to undermine a refinance or purchase.