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Buy-To-Let

When buying property that you plan to let you must ensure that the rental income will cover the mortgage, out-goings and vacant (void) periods. Bear in mind that being a landlord can be stressful and the rewards aren’t as attractive as they have been. Market analysts stress that it shouldn’t be seen as a way to get rich quick and that investors should view it as a long-term investment (at least ten years).

Average gross rental yields (the annual rent as a percentage of a property’s value) have fluctuated wildly in recent years and vary considerably depending on the area and the type of property. In 2005, a survey by the Association of Residential Letting Agents’ revealed that Central London (including the City, Docklands and Islington areas) had the UK’s highest yield with an average of around 11 per cent for both houses and flats. Note, however, that reported yields vary and by most accounts average yields for Greater London are around 5 per cent gross per annum.

In 2005, there was a glut of flats on the market in many parts of the UK and many more were being built. The over-supply of properties for rent has led to a shortage of tenants in some regions, making buy-to-let a risky proposition. However, this doesn’t (yet) apply to London and most market analysts and agents were upbeat about the prospects for 2006, although yields were flat in 2005. You can test the water before buying a property that you plan to let by placing an ad in a local newspaper or Loot (www.loot.com). If you get a huge response you know that you’re on to a winner.



Copyright © Survival Books Limited 2006

“Buying or Renting a Home in London” 1st Edition, David Hampshire and Sue Harris.
Reproduced with the permission of Survival Books Limited.

Further information on this topic can be found in “Buying or Renting a Home in London” 1st edition, by David Hampshire and Sue Harris.

For extensive, annually updated information about buying or renting a property in London, you can purchase this book at www.survivalbooks.net


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