As time moves on, the property market in London expands and evolves and the rate of return on investment rises and falls in different areas of the city. For landlords looking to secure the highest possible income from Buy to Let London properties, it’s vital to be aware of these trends and to keep up with the fast-moving housing market.
eMoov’s research shows which areas of London are in highest demand for each London Underground line, station and shop. The three hot areas are Ruislip, Chorleywood and Bethnal Green but how do these areas stack up in terms of the best returns on investment for landlords looking to buy and rent a one bedroom flat?
5-8% is considered a healthy yield for a property. The statistics show that Ruislip can offer a healthy annual return on investment of 9.25%. This investment was calculated using £250,000 as the average cost of a one bed flat in the area, £1,200 (Rightmove data) as the average monthly rent and £583 (Google mortgages) as the average mortgage payments. This lines up with the Underground Property Map of London which showed that Ruislip Manor was the most in demand station in zone 6 at 80%.
Ruislip offers many benefits for renters, making properties in these areas an easy sell for landlords. High demand equates to a short amount of time that houses may be empty should a resident move on. With a healthy high street, and many amenities in the area it offers a great standard of living. While being in zone 6 doesn’t offer the best nightlife compared to a city centre, the transport routes, which include a 20 minute drive to London Heathrow, do provide renters the opportunity to head into the city, or to Watford for a more active nightlife.
With demand at 82%, Chorleywood is the most in demand area in zone 7. eMoov calculated that a one bedroom flat in this area would cost £225,000, with a monthly rental price of £1,000 and a £531 mortgage repayment. This would give an annual return of almost 8%, which is again a good yield.
While only shortlived, due to a mistake in the calculations, Chorleywood was voted the happiest place to live in the UK. Even after the recalculations it held onto a healthy 3rd place. Factors taken into consideration for this were the low crime rate, large open areas, and quality local shops. The local amenities offer great incentives for renters to both ensure they stay in the area for longer, and any replacements can be found quickly, and efficiently, meaning lower fees or loss of income when the house stays empty.
With improvements in transport links, and people’s proclivity to commute further in order to achieve their dream home for a more affordable price it has made houses in zones 6 and 7 more desirable. With house prices in the centre of London having astronomic prices, for example Bond Street with an average property costs £3.2 million, these areas become unreasonable for most landlords to invest in, however even moving out a single zone can provide significant savings for a landlord looking for a rental opportunity.
Of the three, Bethnal Green is the closest to the city centre, being in zone 2. Demand in the area is at 49% and it has been calculated that a 1 bedroom flat in this area would yield an annual return of over 9%.
Bethnal Green is very close to Canary Wharf and the area is popular with young professionals who want a short commute to work, and to nightlife spots like Shoreditch and Dalston.
It’s important to buy in areas that will always be in demand with tenants, which is why landlords must keep up-to-date with property trends in London. Areas high in demand from tenants are likely to retain quality tenants, and lead to an increased return in the long run.