If you want to be successful as a landlord, knowing where to find the best rental yields is crucial.
We have looked at the history of buy-to-let hotspots over the past few years, the current buy-to-let hotspots in London and an incredible amount of data, so we are able to tell you exactly which areas will give you the best return on your investment.
Property prices rise, yields fall
Over the past five years we’ve seen London house prices rise at a spectacular rate, powered by both overseas investment and record low interest rates. But with property prices at an all-time high, there are very few areas where you’ll find a great rental yield. Your investment may well be going up in value each month, but can you afford to stay in the buy-to-let business if the rent doesn’t cover your costs?
History of hotspots
As our heat maps in the video above show, yields have softened substantially over the past few years. If we go back to 2012 - the year of the Olympic Games - London was brimming with positivity and yields were high. To the east, boroughs Havering and Redbridge were achieving yields over 6%, and even areas such as Hillingdon and Harrow were seeing yields of over 6%. In fact, the only areas with yields lower than 4% - the blue areas on the heat-map - were exclusive Westminster, Kensington and Chelsea.
The momentum of the housing recovery continued into 2013 and we were still seeing nine London boroughs achieving over 6% yields. But as you can see from looking at the heat map, the blue area of sub 4% yields was beginning to spread out to areas such as Camden and Wandsworth.
As we step into 2014, the blue zone of sub 4% yields has really begun to spread across west and south west London, with places such as Ealing and Richmond upon Thames now achieving less than 6% yields.
Today in 2015, we can see that the majority of London boroughs are achieving yields that are lower than 4% - though Barking and Dagenham still offer attractive rental yields.
All is not lost - if you know where to look!
It may sound - and look - a little disheartening, but yields can still be attractive if you know where to look.
We have created an innovative rental yield map which can find the best rental yields in London at the click of a mouse. It enables landlords and investors to look at the granular data within each borough, to determine where the hotspots are in the borough itself.
How does it work?
We analyse property prices and data from several hundred estate agents in London, daily. We then combine the results with data collected over the past three months and compare it against own internal company data, so that we have enough information to be able to make statistically reliable assessments.
This new and innovative calculator allows landlords to target their investment at postcode or street level. It’s now more important than ever that landlords do their research, and invest cleverly and with an open mind.
If you’d like more information on yields and where to invest, or if you’d like us to let or manage your rental property, give us a call on 020 7099 4000.