London Rental Yields Start To Rise Steeply

Reports in last weekend’s Financial Times have highlighted the surge in new buy-to-let purchases,with many areas in London likely to be the first to benefit, according to property search consultant Expatfindaproperty.com.

According to the Financial Times report, landlords are taking advantage of weaker house prices to snap up bargain rental prospects in premier locations. While some are cash purchasers, others are using cheap borrowing costs to expand their portfolios.

Expatfindaproperty.com’s own research suggests that rental yields in many parts of London, in particular, are starting to rise steeply, following many years of static, or only gently-rising, prices. In particular, demand for rental homes near to prime commuting transport links, such as those in the Clapham, Earlsfield, Wimbledon and Raynes Park areas of South West London, has seen agents arranging block viewings, with would-be tenants forced to bid against each other to secure a property.

Emboldened by the strength of the demand, says Expatfindaproperty, agents and landlords are now pushing rents higher, which means that new landlords can expect enhanced returns, as well as realistic prospects of capital growth, when capital prices eventually start to recover. Prospective tenants, however, will find this news less welcome.

Erica Evans, of Expatfindaproperty.com, comments, “Our straw poll of agents in South West London has revealed high levels of optimism for landlords. For those thinking of entering the market from abroad, providing they have a 30% deposit for an expatriate or international mortgage, now is an excellent time to be looking at the market, but location is absolutely critical.

“Strong rental yields are only available in quite specific areas around commuter infrastructure hotspots.”