Private Rental Sector in London increases by 101.65% in 20 years · 04/03/2024
You find me in a reflective mood today as I want to talk about the future of investing in the London buy-to-let property market. I’ve been discussing this with our property agents lately.
The truth is that we have become lethargic, with many people having mistaken the ever-rising London property market since the 1960’s as the eternal gift that kept giving, as property prices in BS postcodes constantly rose and doubled every five to seven years.
The days of making easy money from property investment in London are over, as our letting agents are advising buy-to-let landlords. There is, however, always positive hope.
Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of the UK’s private property landlords, with changes in taxation for buy-to-let property, many pundits are predicting the end of the buy-to-let sector as we know it.
However, it is still possible to make a reasonable, profitable, and safe return on property investment in London despite these changes. Our property agents are advising clients.
As a leading letting agent in London, I have always seen investing in the South West buy-to-let market as I might see Mother Nature – creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes.
You need to study the London property market, take advice and opinions from many expert property investment people, and then decide what the proverbial property weather will be.
Remember, rented property tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them.
Nobody could have predicted how the property market has changed in London over the last couple of decades, for example. Our London letting agents constantly monitor the market.
Looking specifically at the London East Parliamentary Constituency, 20 years ago, 26,554 households (meaning 65.68% of property) were owned and only 3,917 households were privately rented – meaning 9.69% of property was rented out by private landlords.
Roll the clocks on 20 years and the change has been seismic.
Now only 25,688 of properties in the Constituency are home-owners (a drop to only 62.52% being owner-occupied) and the jump in private renting has been out of this world, as 8,028 properties are now privately rented proportionally 19.54%.
Who would have predicted in 1995 the private rental sector in London would have grown by 101.65% in the proceeding 20 years? Our property agents are advising clients daily.
Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (i.e. between 1995 and 2023), they might have predicted similar growth to the growth experienced over the previous 20 years (i.e. between 1975 and 1995), which was a very impressive 351.55%.
Yes, property values in London have increased over the last 20 years (between 1995 and 2023), but by a more modest 321.7% and most of that can be attributed to house price growth between 2000 and 2006.
The property market is constantly changing, and buy-to-let in London has been heavily dependent solely on house price growth, where yield has been almost forgotten.
I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers. As a leading letting agent in London, I see it bringing many opportunities.
You might need to change your buy-to-let benchmarks, your approach to financing, or even consider places other than London in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy-to-let opportunities, instead of short term growth bets and wagers.
The advice I give to my London property landlords, and to my blog readers is this – these changes will make some buy-to-let landlords panic, meaning competition for decent London buy-to-let bargains will reduce as fear of change kicks in and amateur investors flee the market.
These opportunities will provide a more stable platform for knowledgeable and wise London buy-to-let landlords to thrive in.
If you want to learn more about the London Property Market, feel free to pop in for a coffee at our Downend or Chelsea offices for a no-obligation chat with me.
To keep up-to-date with the rented property sector in London, visit my property blog here.