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Is Buy-to-Let in Prime Central London Experiencing a Resurgence?
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
There has been increased demand for buy-to-let in prime central London in recent months, and this trend looks set to continue in 2019, as rental yields improve, according to Black Brick.
The independent buying agency points to the latest data released by Knight Frank, which shows that rental yields in prime central London are currently at a six-year high – an attractive proposition for buy-to-let landlords.
The average rental yield in prime central London in December was 3.35% – the highest level recorded since April 2012 – as a result of rising rents and downwards pressure on prices, reports Knight Frank.
The property firm found that lettings activity across prime London markets has remained firm, despite the current uncertain political backdrop, with the number of new tenancies in November increasing by 12.3% on the previous year.
Knight Frank’s report shows that the average rental yield in prime central London increased by 1.1% in December, in response to falling levels of supply, prompted by landlords seeking to sell their properties in response to recent tax reforms.
But, while supply continues to decline, the number of new prospective tenants registering in prime central London has been on an upwards trajectory since the start of the year, suggesting that rents will rise further in 2019.
There has been similar upwards pressure on yields in prime outer London, as rent price decreases bottom out. An average gross yield of 3.5% in December was the highest recorded since March 2015.
Caspar Harvard-Walls, a Partner at Black Brick, comments: “We are seeing something of a resurgence in buy-to-let enquiries compared with a year ago, and we are sourcing deals offering yields between 4-5%.”
However, he adds that, with reductions in mortgage interest tax relief, such investments are considerably more attractive to landlords who can buy mostly or entirely with cash.
“With rents set to rise perhaps 15% over the next five years, this part of the market should see a bounce,” Harvard-Walls concludes.
