What To Consider When Buying To Let In London
2017 is a challenging time for buy to let investors. The reduction in mortgage interest relief and the 3% extra stamp duty costs have made many potential landlords rethink about investing in a buy to let property.
However, the volatile stock market and low interest rates, coupled with the overwhelming demand for rental properties outstripping supply, means that buying to let is still a viable investment.
And with overall capital gain and the highest rental yields in the UK, London still remains the top spot for buy to let purchases.
If you’re considering a buy to let property in London, then here are some things you should consider.
The area you choose depends on what interests you the most: capital gains or highest yields. In the current climate, East London boasts the highest yields, whereas North London has higher capital gains.
The regeneration in recent years of East London’s housing and transport links, makes it a particularly attractive investment area for potential landlords.
Canary Wharf is one of the most popular spots for buy to let investors. The sleek and stylish financial district is fast becoming the choice of many professionals wanting a pied a terre near the office. And with the opening of the new Crossrail service in 2018, its popularity as a residential area is only set to rise.
Whitechapel is another area that will benefit from Crossrail, while nearby Shoreditch and Docklands are becoming more and more popular as residential hubs.
When choosing an area and property type, you’ll need to consider what type of tenants you want to attract. Depending on whether you want to rent to families, professional singletons or students, your search will need to factor in the following:
- Schools and parks in the area
- Restaurants, pubs and sports centres
- Vicinity to universities or work hubs
- Transport links
Entire Property Or Rooms?
Renting out an entire property gives you the assurance of a single income that’s secured for that period. There’s also less hassle with dealing with multiple tenants and less chance of maintenance issues. If you rent to multiple occupants you may (depending on the local authority’s stance on the matter) need comply with HMO legislation and local council safety regulations.
However, a major risk of a single unit rental is having to deal with periods when the property is empty. Consider that the demand for rooms in a shared property in London, far exceeds supply, which means as a landlord you can expect almost 100% occupancy.
Renting individual rooms in London is also more profitable and can increase your income by 20-30% compared to renting the property as a single unit.
One of the most important decisions you need to make as a landlord is whether to manage the property yourself or use a professional property management service.
Hiring a competent property management company makes more sense both financially and for peace of mind. A property manager has the knowledge and expertise to maximise your rental income, while taking care of important issues such as marketing, tenant screening, rent collection, maintenance and cleaning services.
Pisoria offers landlords flexible property management solutions ranging from full property management to letting only services. For more information, contact our team today.