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A Guide to Buy to Let Investments in London

Michael Wilson, Mountgrange Heritage SalesWhat you should buy?
I often get asked by people what and where we’d recommend when investing in a buy to let in the capital. So here’s my guide to buy to let investments in London.

When looking for a buy-to-let property, follow the golden rule: ask yourself – would you live in it? Quality counts. Some landlords expect that tenants will rent absolutely anything – however, tenants are choosy and with the flood of properties on the rental market, mediocre properties won’t let easily.

Ex-local authority properties, in well maintained purpose built blocks, particularly in London, can be very lettable. They tend to be well located, offer good room proportions and have good sound insulation. Additionally, blocks run by the local authority will usually have lower service charges than private blocks – which won’t erode your yield as much.

With the London market behaving as it is I would recommend focusing on capital growth rather than rental yield. Rents have fallen across the board over the last year, but while yields are down, capital uplift continues to rise.

Where you should buy it?
Queens Park, Kensal Rise, Kensal Green, Harlesden and Willesden.

Harlesden and Willesden in particular have still yet to be ‘gentrified’ – so are areas where you can currently get more for your money.

What should you look out for? Close to transport links/schools are obvious, what would a really smart investor look out for?
Look at an area that might be part of the next price ripple. Are people being priced out of adjacent areas and moving into the area?

New schools opening can be a great sign, particularly schools which might attract overseas investment. The opening of several French Schools in North Kensington, for example, generated significant interest in the area from overseas buyers and tenants. Another French school has recently opened in Kensal Rise, where we are seeing a similar effect.

Consider areas which might not yet have been gentrified, but where there is planned investment or the prospect of improved transport links. The London Borough of Brent, for example, is currently investing £4 million in improving Harlesden Town Centre, part of a 15 year regeneration programme for the area. With the prospect of new high speed rail links in Harlesden, Willesden and Kensal Green in the future, we certainly view these as good areas to invest in.

A wreck or a move in ready home?
It’s down to preference but we would always advise landlords to buy one or the other; either a wreck or a move in ready property, nothing in between.

Move-in ready homes are great as they can usually be let quickly. Buying a wreck and making improvements can add significant value to a property. However, this of course takes time, energy and money, so is often more appealing to professional landlords.

New build or period?
Again, it’s often down to preference. We find overseas investors, particularly from Asia, almost exclusively buy new build, whereas home grown investors tend to favour the charm and character of period.

Look out for service charges in new build properties, as these are often at a premium. Avoid buildings with a lift or concierge service, as these push service charges up, eating into rental yields.

A two bed flat or a house?
Family houses can be a good investment in areas where there are good schools as tenants tend to stay longer, and freehold properties don’t come with a service charge, however, the maintenance costs are usually higher than on flats.

Michael Wilson
Director – Head of Sales
020 7243 7888

29 April 2014

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