Despite the unrest surrounding the Brexit vote and the Chancellor’s decision to increase stamp duty, it appears that there is still a high demand for buy-to-let property in London.
Research recently published by London estate agents Portico (using their unique interactive Rental Yield Map, a tool that gives landlords an instant guide to the value of their property and to the income they can expect each property to deliver) clearly shows London is still very much the place for your rental property to be.
The only difference is the areas Portico has highlighted may not be the first neighbourhoods you'd first think of.
According to their research the top 5 areas of London in which to buy-to-let are currently:
With an average house price of £433,437 and an average rental price of £1,267 per calendar month (pcm) you could enjoy a yield of around 5.5%. This will only go up when Ilford joins the tube map when Crossrail arrives next year, an development that is already seeing the area being flooded with new cafes and shops as it edges closer to assuming its position as the ‘new Bethnal Green’.
An average price of £435,967 and average rent of £1,194 pcm could generate a yield of 5.3% on your investment. However you may have to act quickly as many residents of Isleworth and Twickenham are already moving west to get more for their money and the fact the area is so close to Heathrow, the M25 and the M4 will only continue to make it more attractive.
The average house is Greenford Road costs £463,048 but can be rented for £2,245 pcm which means that like Hounslow, you could be looking at an annual yield of 5.3% on your investment. With a huge amount of recent regeneration and excellent transport links it is an area that is fast becoming very popular with commuters.
Admittedly Croydon has traditionally been an area more ridiculed than coveted but an average house costs just £401,474 and can be rented for £1,180 pcm which means it is likely to generate a 5% yield. Prices are also likely to keep rising steadily as, in addition to its fast links to Central London, Croydon is enjoying a continued wholesale regeneration as well as an increasing number of residents who want to live and work in the borough which is giving the area much more of a neighbourhood feel.
5. Wood Green
Currently the average house price in Wood Green is £533,056 and that would attract an average rent of around £1,400 pcm and, therefore, a yield of 5%. While the area has undergone massive gentrification recently, many buyers are already looking at the implementation of Crossrail 2 and the volume of regeneration those improved links to Central London and the City in particular will bring to the area.
Whilst yield is a vital measurement when investing in property, it's also important to be aware of both the efficiency of the funding of your investment and the short and longer term tax implications of the decisions that you make now.