Posts with tag: London

Rental Yields of 8%+ Still Possible in London

Published On: August 10, 2016 at 11:07 am

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Although soaring house prices in London make it difficult for landlords to achieve high rental yields, London estate agent Portico has found that returns of 8%+ are still possible in the capital.

The agent has used its innovative Interactive Yield Map to analyse each London borough on a street level to find the highest potential yields for landlords.

Rental Yields of 8%+ Still Possible in London

Rental Yields of 8%+ Still Possible in London

The data found that the highest rental yield, of 8.3%, was found in the borough of Havering, in the Romford postcode area around Whybridge Junior School. The average monthly rent price for a two-bedroom flat in the area is just £1,156, which is £600 less than the average monthly rent of £1,756 across the capital as a whole.

Portico found that outer London boroughs offer the highest yields generally, with areas within Barking and Dagenham, Bexley, Redbridge and Bromley all offering yields of 6% or over.

The suburban district of Chadwell Heath in Barking and Dagenham – where the Crossrail service is set to launch in 2019 – offers landlords an impressive yield of 7.6%. Here, landlords can expect to charge a monthly rent price of £1,278.

In inner London, the strongest rental returns and most affordable monthly rent can be found in Greenwich. On the Pelton Road, Bellot Street, Blackwall Lane, Armitage Road and Millennium Way roads around north Greenwich station, landlords can expect a 6% yields with an average monthly rent of £1,477.

If you are thinking of investing in prime central London, however, yields range from 2-4%. The highest, 4.8%, can be found on the northern end of Finchley Road in Westminster, while the area around the World’s End Estate in Kensington and Chelsea offers a 3.8% return.

The Managing Director of Portico, Robert Nichols, comments: “The rental market has remained strong post-Brexit, but landlords still need to be smart about where they are investing, as a very small difference in yield can determine whether they make a profit or a loss.

“If you’re thinking of buying to let, transport links are key. London’s commuting tenants want to be within close proximity of a Tube, so look for properties near new developments such as Crossrail and Crossrail 2.”

He suggests: “Havering, Barking and Dagenham, and Bexley, which will soon have stations on the eastern edge of the Elizabeth Line, are clearly key investment hotspots where landlords are achieving extremely impressive yields.”

Landlords, will you take advantage of the high rental yields still on offer in the capital?

London Olympics’ Legacy Lives on Through Housing

Published On: August 10, 2016 at 8:34 am

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The London Olympics’ legacy continues to live on through the housing market, according to the latest research by hybrid estate agent eMoov.co.uk.

The firm found that since the London Olympics in 2012, property values in Stratford’s Olympic Village have shown greater strength than prices across the capital as a whole.

London Olympics' Legacy Lives on Through Housing

London Olympics’ Legacy Lives on Through Housing

Having been originally built to accommodate those competing in the Games, the Olympic Village has since been designated its own postcode (E20) and utilised as a residential complex, helping to tackle the capital’s housing shortage.

Although many cities have seen their Olympic legacies fade, it was widely believed that London would continue to benefit from the extensive regeneration it experienced ahead of the 2012 event. But what benefit, if any, has this regeneration brought to the London housing market?

The average property price in Stratford’s Olympic Village is now £459,199. Although this is significantly lower than the London average of £550,000, prices have soared by a huge 43% in the E20 postcode since the complex’s construction.

Over the same period, the London market as a whole has seen an average increase of 38%, despite widespread inflation as a result of high demand and a chronic lack of housing stock.

In England, the average house price rise was even lower, at 24%, taking the typical property value to £257,567.

Those that purchased property in the Olympic Village certainly seem to have won gold when it comes to housing; not only has house price growth outpaced the rest of the capital, property values are much more affordable than in London as a whole.

The founder and CEO of eMoov, Russell Quirk, says: “It goes to show that regardless of whether you thought the London Olympics was money well spent or not, the regeneration of what was essentially an east London wasteland has helped to breathe new life into the area where property is concerned.

“Yes, the area may have benefitted more so because of the Games, but we’re now four years on and the Olympic Park has seen a larger property value increase than the capital as a whole. That’s no coincidence. What has been done with Stratford should be an example that we should look to replicate right across London.”

With such potential for substantial capital growth and affordable house prices, could Stratford be your next investment spot?

Is There a Solution to the Housing Crisis?

Published On: August 6, 2016 at 8:36 am

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It’s well known that homeownership is in decline. In fact, it’s at the lowest level for three decades. But is there a solution to the housing crisis?

Claire Carponen, of the HomeOwners Alliance, has taken a look at the main problems and possible solutions to the UK’s housing crisis.

The average wage in the UK is £26,500, while the average house price is over £200,000. It doesn’t take a mathematician to work out that the odds of buying a house for a first time buyer are pretty slim.

Is There a Solution to the Housing Crisis?

Is There a Solution to the Housing Crisis?

Carponen claims that the gap between wages and house prices is one of the main barriers to homeownership.

According to a report from the Resolution Foundation, homeownership has dropped to its lowest level for three decades. After hitting a peak of 71% in 2003, the number of households that own their home has now dropped to just 64%.

But don’t be fooled into thinking this is a new trend. Four years ago, the HomeOwners Alliance published a report named The Death of Dream: The Crisis in Homeownership in the UK, which found that homeownership has been in decline for years.

Although the recession did accelerate the rate of decline, it is not a short-term blip caused by financial difficulty, but rather a long-term trend.

Carponen reports that affordability remains an issue in the south of England, but is now spreading to other parts of the country. The Resolution Foundation’s report warned that while the news focuses on the housing crisis in London, those living in Manchester are actually facing greater difficulty in getting onto the property ladder.

While the south has typically had higher house prices, the north is catching up, with both Manchester and Yorkshire experiencing steep drops in homeownership.

The CEO of the HomeOwners Alliance, Paula Higgins, recently said in an article in The Telegraph: “The decline of homeownership and the lack of affordable housing is having – and will increasingly have – profound, long-lasting and adverse economic and social consequences.”

Although housing has become so unaffordable, Carponen has found that most people still aspire to own their own homes.

Being a homeowner is much more than just owning a pile of bricks and mortar, she insists. Those that own their own home are more likely to have a better quality property, a sense of stability and permanence, and a financial safety net for old age.

And while the Government is trying to help with its first time buyer initiatives, its schemes aren’t reaching enough people, believes Carponen. Although it proudly announced in March that its Help to Buy scheme has helped 180,000 first time buyers get on the property ladder, this was over a three-year period.

The fact that not enough homes are being built has been well documented. But Carponen warns that more homes may not necessarily solve the housing crisis. In central London, thousands of new homes are currently under construction or in the pipeline, yet most will be unaffordable for the majority of people who are living and working in the capital.

Higgins insisted: “We must make sure that the homes being built are of the right quality and meet the needs of the ultimate owners – last time buyers as well as first time buyers – and not the housebuilder.”

While many young people are struggling to get a foot on the property ladder, landlords must remember to provide safe, suitable and secure homes for those forced to live in the private rental sector.

The Cost of Renting Across the Capital

Published On: August 4, 2016 at 9:19 am

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Although the cost of renting in the capital has slowed for the second quarter this year, unprecedented levels of demand mean that tenants are still struggling to find affordable housing.

A new report from flat and house share website SpareRoom.co.uk found that the average rent price in the capital has risen by just 1% over the year, taking the typical cost of renting a room to £734 per month in London.

The Cost of Renting Across the Capital

The Cost of Renting Across the Capital

Although the cost is continuing to rise, this year’s rate of growth is significantly lower than the 8% recorded between 2014-15.

The Director of SpareRoom, Matt Hutchinson, explains: “It seems many areas of London are at rental saturation – people simply can’t afford to pay higher rents, so they’re stabilising.”

A third of postcode districts in the capital have seen an annual decrease in average room rents, with prices falling by 4% in northwest and 2% in west central and east central London.

A slowdown in rent price rises has also been seen across the wider residential lettings market. However, a recent report claims that rents are up in prime central London, as buyers remain cautious over the Brexit outcome.

Parts of southwest London are also bucking the trend, such as Barnes, Tooting, Mortlake and West Brompton/Chelsea, with average room rents now at £763 per month following a 5% annual increase.

However, demand continues to be high in this part of the capital, as an increasing number of tenants are priced out of Clapham, Battersea and Fulham. Four renters are competing for every room, while in west central London, the odds of securing a room are slightly lower, with five potential tenants for every vacancy.

The Head of Lettings at Rightmove, Sam Mitchell, reports: “Overall demand from tenants is at record levels. There will always be localised markets where there just isn’t enough property and rents therefore will rise. Typically, this happens in areas in Zone 2 with really good transport links.”

Mitchell also notes that following a rush of buy-to-let landlords to purchase rental properties ahead of the Stamp Duty deadline in April, the lettings market experienced an influx of properties on the market, which has led to a slowdown in rents.

According to SpareRoom, east London is the best bet for tenants to find a room, as it offers the greatest levels of supply and the cheapest prices.

Landlords looking for the highest returns should look to Abbey Wood in southeast London, which has recorded rent price growth of 21% over the year, largely due to the forthcoming Crossrail project. The average rent price per month here is now £564, cementing it as one of the few remaining areas with an average rent price under £600 a month.

The cheapest places in London to rent a room are Eltham (£518), Manor Park (£525) and Chingford (£544), which are all in southeast or east London.

With tenants heading east, landlords should move further out of central London to take advantage of high levels of demand.

Rent Prices Up in Prime Central London Following Brexit

Published On: August 4, 2016 at 8:34 am

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Rent Prices Up in Prime Central London Following Brexit

Rent Prices Up in Prime Central London Following Brexit

The prime central London rental market has remained strong following Brexit, with rent prices rising between May and July, according to London estate agent Portico.

The agency’s July Rental Market Update found that the average rent price for a two-bedroom property in the prime central London borough of Kensington and Chelsea has increased by 0.4% post-Brexit, while rents are up by 1.7% in the City of Westminster.

These two prime central London boroughs have again recorded the highest average rent prices of all the London boroughs, with the average rent price for a two-bed home in Kensington and Chelsea almost hitting the £4,000 per month mark, at £3,989.

On the whole, Portico’s data suggests that the rental market has remained fairly stable post-Brexit, with average rent prices experiencing a slight 1.7% decrease between May and July.

The boroughs with the greatest rent price rises between May and July were Camden, at 3.3%, Tower Hamlets, 1.2%, and the outer London boroughs of Newham, 2.6%, Haringey, 2.2%, Hillingdon, 1.3% and Sutton, 1.1%.

The Managing Director of Portico, Robert Nichols, comments on the figures: “Caution in the sales market has pushed demand into the prime rental market, and as such, we have seen rental prices rise over the past few months. We expect the market to remain stable throughout the summer months, but whether rental prices will continue to rise will depend on the economic consequences of Brexit.

“Outside prime central London, the rental market has remained stable, with tenants still keen to snap up properties in hotspot areas created by infrastructure projects like Crossrail and Crossrail 2, such as Tower Hamlets, Newham, Haringey, Hillingdon and Waltham Forest.”

If you are thinking of investing in the London market to take advantage of robust conditions and forthcoming infrastructure improvements, look to the areas that are likely to benefit from the new Crossrail 2 project. Portico has highlighted the areas that landlords should consider for their next buy-to-let investment: https://www.justlandlords.co.uk/news/crossrail-2-coming-london-invest-along-line/

How have London’s Olympic boroughs faired post 2012?

Published On: August 2, 2016 at 9:46 am

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With the Olympics in Rio just days away, a residential property crowdfunding platform has looked at how property prices in London have changed since the Games 4 years ago.

According to Property Partner, the six Olympic boroughs used during the London Games have outperformed the majority of others local authority areas in the capital.

Investment

The investigation found that major financial investment has driven property prices up by an average of 64% in the six boroughs during the period. Hackney, Newham, Barking and Dagenham, Greenwich, Tower Hamlets and Waltham Forest performed better than the still healthy 52.8% house price rises recorded in the capital’s 32 boroughs.

Waltham Forest received the gold medal, recording house price growth of 76% in the last four years. Hackney took the bronze, with growth of 66.9%, while Newham was squeezed out of the medal positions with 62.6%.

Non-Olympic borough Lewisham took the silver medal with house price growth of 67.9%.

How have London's Olympic boroughs faired post 2012?

How have London’s Olympic boroughs faired post 2012?

Legacy

Dan Gandesha, CEO of Property Partner, said, ‘London 2012 was the catalyst for a flood of investment into the capital, much of which was injected into regenerating some of the capital’s most disadvantaged boroughs. The economic legacy of the Games-supporting new jobs and skills, encouraging trade, inward investment, tourism and improved transport links-has meant a corresponding rise in house prices in the six host boroughs. The economic, social and environmental gap between these boroughs and the rest of London is closing.’[1]

‘Over the next few years, the capital will further benefit from significantly infrastructure projects-particuarly Crossrail where areas that were relatively inaccessible will suddenly be on London’s doorstep. In turn, like the Olympic effect, house price around Crossrail’s 40 stations are continuing to see an upward trend despite post-Brexit uncertainty,’ he continued.[1]

Concluding, Gandesha noted, ‘The reality is, no one can say for sure what will happen just now. But the fundamentals of the capital’s housing market are self-evident – demand far outstrips supply, which is further exacerbated by population growth and low borrowing costs. Moreover, the Bank of England is likely to reduce base rates even further in the very near future.’[1]

[1] http://www.propertyreporter.co.uk/property/olympic-boroughs-continue-to-outperform-other-areas.html