Lack of property developments in capital helps maintain buy to let rental values
Added 02.03.10
Buy to let landlords in the London area will enjoy greater yields in 2010 and are well positioned to take advantage of the current market say two property specialists.
Residential property investor David Pearl and letting agent Stephen Ludlow, Director of ludlowthompson.com, agree that the fall in house prices have made the yields on buy-to-let property look increasingly attractive for investors.
And in the capital one in five (21 percent) of buy to let properties are now offering yields of more than 7 percent, claims Ludlow.
He said: “The fall in house prices has driven yields on residential property up. Although the average yield on buy to let properties across London is now 6.3 percent there are ever larger pockets of the market where yields are much higher.
“It isn’t too hard to buy a residential property that will yield 8 percent or 9 percent. The South East of London currently has the largest proportion of properties offering yields of over 7 percent. In fact nearly one in three properties in the South East of London now match that criteria.”
Ludlow explained that one positive side effect of the credit crunch is that the development pipeline for new residential properties has effectively been turned off which means that new rental properties now have less potential to drag down rental values.”
One of Pearl’s main predictions for 2010 is that local authorities in the region are likely to sell off some of their real estate stock, which will present a golden opportunity for investors and landlords looking to expand.
He has seen that most of these properties are often lower in value than real estate which is traded by private entities.
Pearl said: “The best way to determine the sector’s overall direction is to see how residential properties are doing, as investors and landlords tend to serve as ‘belle-weathers’ for the entire market.
News feed courtesy of Residential Landlord