Posts with tag: London

London’s Top Commuter Towns for Property Investment Revealed

Published On: February 22, 2019 at 10:32 am

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With a growing number of Londoners renting homes outside of the capital, due to stretched affordability, more buy-to-let landlords are now looking beyond the confines of London when investing in property. To help you decide where to invest, the top commuter towns for those working in the capital have been revealed…

Credit specialist TotallyMoney has ranked London’s commuter towns, based on average house prices, length of a train journey into the capital, the cost of an annual season ticket, and the commuter town’s Office for National Statistics lifestyle rating. 

Cheshunt in Hertfordshire came out on top for property investment this year.

Located around 26 minutes from central London, a season ticket here, which costs £2,288 per year, is the fifth cheapest of the 116 towns analysed in the study.

For buy-to-let landlords thinking of investing in property in Cheshunt, the average house price is currently £384,248.

According to TotallyMoney, the level of life satisfaction in the town is ranked at 7.92, which is the same as Waltham Cross (also located in Hertfordshire), the town that came in second place.

Commuters in Waltham Cross can expect to pay £2,028 for an annual season ticket and travel for around 28 minutes to get into London.

However, house prices here are slightly more expensive, at an average of £390,612.

High Wycombe, Buckinghamshire, ranks in third place.

The average journey time into the capital is 30 minutes, while the typical property value is £331,092.

Hatfield in Hertfordshire, Gravesend in Kent, and Broxbourne in Hertfordshire also made the top ten commuter towns for property investment, along with Watford Junction in Hertfordshire, Basingstoke and Overton in Hampshire, and Hemel Hempstead in Hertfordshire.

If you’re looking to cater to high levels of tenant demand in London’s commuter towns, take note of the top locations detailed in this study. 

Demand Up but Supply Down in London’s Private Rental Sector

Published On: February 21, 2019 at 9:54 am

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Categories: Lettings News

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Local councils failing to address housing shortage say 90% of UK public 

Demand from new tenants in London’s private rental sector is rising at a time when the number of homes available to rent is coming down, according to new data.

The latest annual London Letting Report from Foxtons estate agent shows that the number of new prospective tenants registered per new rental property listing in 2018 increased to an average of almost nine, with close to 175,000 renters registered with the firm last year – its highest ever level.

However, the figures also reveal that the supply of available properties to let moved in the opposite direction, with the amount of homes to rent falling by 13% at the end of 2018, when compared with the same period of the previous year.

Sarah Tonkinson, the Director of Institutional PRS and Build to Rent at Foxtons, says: “We saw an increase in the number of renter registrations over the course of 2018 compared to 2017.”

As a whole, London experienced an 8% rise in tenant registrations over the year, led by growth in the Zone 2 area, which saw a 13% jump in tenant demand.

Overall, the stock of properties available to rent plummeted, with 11% fewer homes coming onto the market on an annual basis. 

With demand far outstripping supply in the capital, the current state of London’s private rental sector provides a potential benefit to new and existing landlords, Foxtons points out.

Tonkinson explains: “The numbers were particularly good for Q4 [the fourth quarter of 2018], which is traditionally a slower market. That, coupled with less available stock, is good news for landlords for the start of 2019.”

With tenant demand at record levels, are you inclined to invest in London’s private rental sector? It may be a good time to expand your portfolio to locations where supply is low and demand is rising. 

Rental Decline Slowing Down in Prime London

Published On: February 19, 2019 at 10:57 am

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Rental Decline is Slowing Down in Prime London

Rental values in prime locations across London have seen some signs of a slowdown in decline, as initial signs of a bottoming out have appeared.

International property consultants, Savills, have reported that rental prices in London have declined by 0.8% in 2018, with cheaper properties significantly outperforming more expensive ones.

Properties with rental prices of up to £500 per week have seen a five-year price growth of 6.6%, but properties with rents of up to £3,000 have dropped by 19.5%.

What are the predictions for rental prices over the next few years?

Savills predicts that rents will rise going forward, over the next five years they predict an increase of 11.5% on average, with a 12.6% increase in the prime commuter zone. However, growth is expected to be slow or non-existent in the short term, as the political and economic uncertainty surrounding Brexit continues. Rents fell by an average of 9.6% across London’s prime areas since the referendum in June 2016.

What’s the demand for properties likely to be?

London’s commuter belt, the prime rental market of London, has seen a steady demand for smaller properties. This matches the need of younger tenants commuting to the city for work, and rents for one or two bedroom properties have seen double digit growth over the past five years.

The outlook for rental prices seems to be largely reliant on stock levels, and if the sales market improves, it could see many accidental landlords exiting the private rental sector. Similarly with recent restricted tax relief on interest payments and other changes recently, such as the stamp duty levy on buy-to-let properties, there are uncertainties regarding the availability of rental properties.

Head of Residential Research at Savills, Lucian Cook, said: “We are seeing footloose, cost-conscious tenants drawn to prime areas that offer greater value, rather than confining their search to premium addresses, and there’s a deeper seam of demand for smaller properties driven by needs-based younger tenants.

“But that doesn’t mean we can anticipate falling rental supply. Instead, we expect cash investors to become increasingly dominant, especially in central London, while history suggests international investors will become more active as uncertainty clears, particularly if they can play the currency card. Stock levels also look set to rise as the number of new build homes completing increases.”

Highest Level of Homes Bought by International Buyers in PCL in 6 Years

Published On: February 18, 2019 at 10:38 am

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International buyers have been purchasing a high proportion of London property in PCL

International buyers purchased 57% of homes in prime central London in the second half (H2) of 2018, which is the highest level in six years, according to the latest International Buyer and Seller Survey from Hamptons International.

The estate agent found that the number of homes bought by international buyers in prime central London reached the highest level since H2 2012 (58%) in H2 2018.

The survey, which began in 2011, is completed by prime Countrywide branches across London and its neighbouring commuting counties.

Prime central London

The proportion of international buyers in prime central London rose from 55% in H2 2017 and 39% in H2 2016, following the EU referendum. Pre-EU referendum, international buyers purchased 40% of homes in prime central London (H2 2015).

The pick-up in H2 2018 was due to a decline in UK buyers, combined with an increase in EU buyers, Hamptons reports. EU buyers have regained their place as the biggest group of foreign buyers in prime central London, purchasing one in five (19%) homes in H2 2018, which is up from 10% in H2 2017.

The amount of homes bought by Middle Eastern buyers in prime central London has almost halved over the past year, from 15% in H2 2017 to just 8% in H2 2018.

Greater London

Meanwhile, in Greater London, the proportion of homes bought by international buyers also rose to the highest level in six years. In H2 2018, international buyers purchased 36% of homes, which is up from 31% in H2 2017. This number is 15% higher than in H2 2015 (pre-EU referendum), when international buyers bought 21% of homes.

This pick-up was also caused by a rise in EU buyers in Greater London. EU buyers purchased 14% of homes in Greater London in H2 2018, which is up from 8% in H2 2017 and 10% in H2 2015.

Over the last year, the proportion of homes purchased by buyers from India (+3%), Russia (+1%) and Hong Kong (+1%) has also increased.

Aneisha Beveridge, the Head of Research at Hamptons International, comments: “The proportion of homes bought by international buyers in London hit the highest level in six years. In H2 2018, 57% of homes in prime central London were purchased by a foreign buyer. The increase was caused by a drop off in UK buyers and a 9% year-on-year rise in EU buyers.

“Sterling’s weakness, making it cheaper for many international buyers, seems to be outweighing Brexit uncertainty when it comes to foreign buyers making a decision on where to buy a home. A property that would have cost an EU buyer £1m in H1 2016 effectively cost £124,000 less in H2 2018, due to sterling’s depreciation.”

Rent Prices in Prime London Rise Due to Higher Tenant Demand

Published On: February 13, 2019 at 9:02 am

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Rent prices in prime London rose by an average of 1.9% in the fourth quarter (Q4) of 2018, due to higher levels of demand from tenants, as continued political uncertainty pushed prospective buyers into the prime rental market.

The latest Prime London Lettings Index from LonRes shows that rent prices rose in Q4, owed in part to a supply-demand imbalance in the market, with 80% of respondents to the LonRes Agent Survey reporting an undersupply of studios and one-bedroom flats in their areas.

Over the course of 2018, 13% fewer properties reached the market.

However, it is worth pointing out that prime central London saw a slight year-on-year decline in rent prices – down by 1% on Q4 2017.

Many landlords remain cautious and are not raising rents for existing tenants, the report adds.

In Q4 2018, 72% of letting agents said that most of their landlords were not increasing rent prices on tenancy renewals.

As for new tenancies, renters negotiated an average of 4.9% off the initial asking rent in Q4, which is down from 6.4% in the same quarter of the previous year.

Meanwhile, 31% of properties in prime London underwent a price reduction in Q4 before securing a tenant, compared to 41% in Q4 2017.

A combination of fewer homes to let reaching the market and higher demand from tenants suggests that rent prices in prime London will rise in the near-term.

Some 58% of respondents to the LonRes Agent Survey reported an increase in tenants who were previously looking to buy. Just 8% reported a fall.

An increase in tenancy renewals resulted in fewer net lets agreed in Q4, which is down by 17% on the same quarter of 2017. The declines were greater in the second half (H2) of last year, with an 11% reduction in new lets, compared to 2% in H1 2018.

With fewer properties available to let, the time taken to find a new tenant has dropped. In Q4, 30% of properties to let in prime London had a new tenant within a month of being listed, compared to 23% in Q1 2018. This is the highest level for four years.

Marcus Dixon, the Head of Research at LonRes, says: “In an uncertain market, the response by both buyers and sellers in prime London has been to hunker down and observe, rather than participate. This is impacting on both transaction levels and prices. However, for those willing to buy, there are opportunities to be had and purchasers are negotiating accordingly.

“The prime rental market continues to benefit, as would-be buyers become tenants. Despite fewer new lets agreed, owing to an increase in renewals, stock levels are low, and competition among prospective tenants is leading to increases in achieved rents in most central London areas. Fewer landlords are needing to reduce their asking prices and discounts have fallen back.”

The Most Unaffordable London Boroughs for Tenants Revealed

Published On: February 12, 2019 at 10:31 am

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Prime London Lettings Report is showing that demand is outstripping rental supply.

New research has identified the most unaffordable London boroughs for private tenants, based on the cost of living compared to the average wage of residents in each borough.

The study, by Ideal Flatmate, looked at the average earnings of residents compared with the typical rent on a one-bedroom property in each London borough, along with the varying costs of travel cards and Council Tax, and the average spend on food, energy bills, internet and phones across the capital. Other basic outgoings, such as clothes and leisure activities, were not factored into the calculations.

The research found that 12 of the 32 boroughs were completely unaffordable for tenants, with the basic cost of living accounting for or exceeding the average monthly earnings. A further 13 boroughs saw the cost of living account for 90% or more of the typical wage.

Unsurprisingly, London’s most expensive borough, Kensington and Chelsea, came out as the most unaffordable for tenants, with a basic cost of living of £2,452 per month, which accounts for 117% of the average monthly net pay in the borough.

Brent is not far behind, with the monthly cost of living making up 116% of the average wage of £1,587 per month.

Hackney, Hounslow, Enfield, Newham, Camden, Ealing, Haringey, Barnet, Waltham Forest, and Barking and Dagenham were also home to a cost of living that ate up all or more of the average monthly earnings of their residents.

But there is some hope for the capital’s tenants. The cost of living in Bromley was £1,597, which is 80% of the average monthly net income of £2,002, making it the most affordable borough to rent in in London.

Wandsworth, Bexley, Havering, Croydon, Richmond and, perhaps surprisingly, Hammersmith & Fulham, all had a cost of living that sat below 90% of the average monthly wage for residents.

Tom Gatzen, the Co-Founder of Ideal Flatmate, says: “While Brexit uncertainty has seen a slow in the sales market, we’ve continued to see the level of London rents climb by nearly 5% on an annual basis.

“Although unemployment has been falling and wage growth has been on the up, this research demonstrates how vast the reality gap still is between the money available and the cost of living in London. We’ve only looked at the very basics, and this research hasn’t factored in things like clothing and leisure, but, of course, the main outgoing driving this unaffordability is the price of rents.”

He continues: “With such high levels of unaffordability across the capital, it’s no wonder we’ve seen such a surge in demand for room shares. The reality for those looking to rent in London is to pay through the nose, share with a friend or partner, or to move in with people in the same situation.

“Luckily, the latter has changed drastically in a few short years and it is no longer the daunting experience it once was, thanks to greater compatibility checks ensuring that it isn’t just the property that is right for a tenant, but the people they’re sharing with as well.”