London buy to let market can be a minefield · 14/03/2024
The buy to let sector in London, in fact the whole of the South West buy to let sector is doing very well at the moment, but it can be a minefield. I could regale you with many stories where investors have got it incredibly wrong in London, like some modern apartments in the Speedwell area of London, that were sold for an eye watering £157,000 in 2006, only to be selling today for on average £127,700, a drop of over 22.9%. It is interesting to note that at that time in 2006, for £157,000, you could have bought a 3 bed bay fronted semi in Kingswood worth a staggering £265,000 today! That’s an increase of £108,000 or 68.8%. The thing is, I still see mistakes being made on a weekly basis in London. You make even a small mistake, it could still prove very costly.
So what should you buy in London? One option is Houses of Multiple Occupation (HMO’s). While they can be profitable, chiefly in the student market with London University students, they can make things much more complex and costly, with the need for HMO licenses etc. Mortgage rates on buy to let are low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25%, but the best rates are for deposits of 40%, where I as type this, you can get a 5 year fixed rate buy to let mortgage from the Post Office for 3.65%. Also, the deposit will ensure you have plenty of equity in the property, if the property market stagnates in the future. The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield that lets easily.
There are plenty of good financial advisors in London that can help you with the mortgages. We aren’t one, because we are a letting agent, but what we can help with is choosing the right London property to buy. It’s in our interest to do so, because if we offer the best advice and opinion, without any conflict of trying to sell you anything (because we aren’t estate agents so have nothing to sell you), you might consider (although there is no obligation) to trust us to manage the property.
If you are considering buying a property for investment, I am always happy to give you my considered opinion. Email me on clifton@intire.co.uk or visit www.bristolpropertyblog.co.uk for daily updates on which properties currently for sale in London we consider to be the best buys.