Our new Buy-to-Let City Tracker1 analyses 25 cities across the UK to understand the best places for landlords to invest in. London ranks in fourth place despite property prices increasing at 5.5% a year on average over the past decade. However, strong rental prices (at £630 per room per month) are offset by very high property prices in London (£617,238 on average) meaning annual rental yields are very low for a new buy to let purchase.
We asked Andrew Montlake, Managing Director of Coreco, to comment:
Despite the political landlord bashing that has been going on recently and the associated tax changes that many landlords have been struggling to get their heads round, the death of the Buy to Let landlord has been much exaggerated.
Even in London, where yields are lower than other areas of the country, demand for rental property continues to make letting a property an attractive prospect for many landlords. The key is to make sure you first obtain independent tax advice to fully understand the changes that have occurred in the market and to help make a decision whether it is best to purchase in personal names or within a limited company.
The appeal of London as an area to live and work has not changed despite the threat of Brexit and its relatively high prices. Companies have continued to invest in the capital, such as Apple making Battersea Power Station its HQ, and it is still a thriving centre for finance and technology. Foreigners continue to see London as a great area to both invest, especially given the relative weakness of Sterling, and as a place to educate their children.
In fact, in a post-Brexit world it looks as though London will continue to draw people in with no sign of its magnetic effect diminishing, and all these people need places to live and to rent. The future of landlords in London may look slightly different, with landlords having to work harder to attract the best tenants, but it still looks very rosy.
1 Aldermore’s Buy-to-Let City Tracker was designed by Opinium and comprises of five core indicators: average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rise over the last 10 years, proportion of vacant properties in the city and size of the private rental market. The index uses a series of secondary data sources including the ONS, Census and other official housing statistics. To read more visit https://www.aldermore.co.uk/about-us/newsroom/2019/12/oxford-tops-the-list-for-buy-to-let-investment-as-hidden-gems-revealed-across-the-uk/
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