London rental: £916,500 purchase and £6,649 monthly rent — sanity check

I’ve checked the purchase-price calculation, but the support for the rent remains unclear. The property is a 1-bed detached home in London at £916,500, and the proposed rent of £6,649 a month produces a gross yield of about 8.7%. That return is attractive, though it also makes the deal unusually dependent on maintaining one high rent.

My figures allow for vacancy, management, ordinary repairs and a larger maintenance buffer. I still need evidence from comparable completed lettings, confirmation of whether the rent assumes a standard tenancy or a furnished arrangement with bills, and an insurance quote for that use. The next step is to rerun the figures with a longer void and the intended financing cost. What net yield would justify the concentration and turnover exposure after those adjustments?

Before refining costs, I would challenge the £6,649 rent. That is £79,788 annually, so the deal depends heavily on achieving it consistently. Is it supported by completed long-term lettings, or only current asking prices? My likely underestimated cost would be turnover: an empty period, marketing, management and preparing the home for the next tenant can arrive together. Personally, I’d want at least a 5.5% net yield before financing.

Is £6,649 for a standard long-term tenancy, or a furnished/shorter arrangement with bills included? The vacancy, management, insurance and maintenance assumptions could be completely different. It would also help to know whether you are buying with cash or debt, because a modest change in financing cost may matter more than trimming the repair estimate.

I’m not convinced turnover is automatically the largest omission. With a detached property, insurance and irregular exterior or building repairs deserve separate annual allowances rather than one generic large-repair figure. Also establish who bears the relevant property tax and utilities under the intended tenancy. I would not choose a net-yield target until the rent basis and those responsibilities are clear.

One practical approach: model three rents—£6,649, a lower achievable figure, and a stressed figure—then combine each with longer vacancy and higher management costs. Keep acquisition costs outside the operating yield but include them when measuring total return. If the investment only clears your required yield in the £6,649 case, local supply is not a side issue; it is the central risk.