Many investors prefer to focus on the London market, despite the current drop in rental demand for properties in zones 1-2. The current historically high property prices and lower rents mean that net yields have fallen dramatically in recent years.
At current prices, net yields after all costs are typically 1%-2% at best. Capital growth in London is likely to be less than in other parts of the UK, so the attraction of buying a bulk standard two-bedroom apartment in the capital has waned for many investors. Fortunately, that doesn’t mean there aren’t some great opportunities in London.
Whilst rental demand has fallen in central London, in many areas of zones 3-6 it has remained strong. With London’s superb transport system, commuting to most parts of the capital is relatively easy and many tenants seek to live in outer suburbs where rents are more affordable.
The co-living/HMO sector in London offers quality, suitable properties with much higher net rental yields. Conveniently located houses that can accommodate multiple tenants can show yields of 5% p.a. plus, net of all costs. Why settle for less when there is strong rental demand and attractive yields on offer in the HMO sector?
We have been active in the London market for over twenty-five years; we know and understand the market there. We have been involved in multiple development/refurbishment projects and have managed a portfolio of London residential properties since 1997. If you want to invest in London and want to enjoy a higher, secure rental yield, please contact us.