Recent findings by Benham and Reeves highlight a notable trend in the London property market — pre-tenanted buy-to-let investment opportunities are remarkably scarce. With only 2% of current property listings coming with tenants already in place, buy-to-let investors face unique challenges in the capital.
The analysis conducted by Benham and Reeves examined buy-to-let properties listed for sale across England that come with existing tenants. The research aimed to identify how these investment opportunities vary regionally. While investors typically prioritise yield, the presence of a tenant can significantly influence the success of the investment, minimising void periods that may otherwise impact annual returns.
The North West leads with 21% of the national total of pre-tenanted properties available for investors, followed by the South East at 16%. Other regions such as Yorkshire and the Humber, East Midlands, East of England, and West Midlands also present substantial opportunities, each offering around 11% to 14% of the total tenanted properties on the market. Conversely, the South West and North East each account for only 5%.
Challenges in the London Market
London stands out for its particularly low proportion of tenanted properties, making up just 2% of the total listings with tenants in place. This scarcity poses a challenge for investors seeking the immediate financial stability that comes with acquiring an occupied rental property.
Marc von Grundherr, Director of Benham and Reeves, shed light on the situation: “Void periods can be a significant thorn in the side for buy-to-let investors and will seriously reduce the earning potential of their investment if they drag on for too long. So a tenanted property can make for a very appealing investment opportunity as it allows a rental income to be generated as soon as the deal has been done.”
Optimism Despite Low Availability
Despite the low availability of pre-tenanted properties, London’s dynamic rental market compensates with its rapid letting rates. Von Grundherr further reassured investors, stating, “While London is home to the lowest proportion of tenanted property availability for current investors, they need not worry. Such is the imbalance across the capital’s rental market that any available stock is letting at a phenomenal pace and so they can rest assured that if they do bring an empty property on the market, any void period is likely to be very short-lived.”
This analysis underlines the distinctive landscape of the London buy-to-let market, suggesting that while pre-tenanted properties are rare, the city’s robust rental demand continues to offer substantial opportunities for new and seasoned investors alike.
