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Why landlords should invest in London property

London property experts JBrown outline why the capital is a great place for landlord to invest in.

London doesn’t need much selling as a destination. As a world leader in finance, commerce, tourism, culture and services, it is strategically placed – both geographically and in terms of its timezone – as the perfect bridge between the US, Europe, the Middle East and Asia.

It also has more landmarks than pretty much any other global city and is a diverse, multicultural and tolerant place to live, study and work. What’s more, it is home to some of the world’s top universities and research facilities, enjoys extensive transport links and has a wide range of entertainment, leisure and culinary venues on offer.

With all this in mind, it’s little surprise that so many people want to live and work in London. That said, some private landlords might be put off from investing in the capital for fear that the competition is too fierce, the prices too high and the yields too squeezed.

However, those who purchase the right sort of property in the right sort of areas should receive ample rewards. While property investment is always a calculated risk, London is often talked of as a safe haven because of the unique position it holds in the world and the continued - and ever-growing – demand for rental properties in the capital. Landlords and investors see London as a safe bet, because its property market is robust, strong and more often than not impervious to outside pressures.

Demand outstrips supply, which keeps rents high and yields solid. Capital gains, more than anywhere else in the country, are also reliably high in London, with prices growing steadily – and often soaring – year on year.

As a landlord, you will have a number of factors in mind when it comes to choosing where to invest, which will probably include questions like: “does the area in question have a wide pool of prospective tenants?”, “do I have a good chance of minimising void periods?” and “if I ever come to sell, will I make a good profit?”

In the case of London, the answer to all three questions is an emphatic yes. You can advertise your rental properties to a wide range of potential tenants, from young professionals and families to city workers and students.

At JBrown we operate offices in two very distinct parts of the capital. One is based in fashionable Mayfair, a highly sought-after area for tenants, attracting everyone from diplomats and politicians to overseas students and young professionals.

Our other office is based in the heart of the City, on Level 4 of the Aldgate Tower on Leman Street. City workers eager to be close to their place of work and those studying or working in East London locations just outside of London’s financial services hub are likely to be attracted to rental properties in this area.

While property prices in Mayfair are not cheap, this is offset by high rental income and strong capital gains. Prices are cheaper in and around the City, and parts of East London can still offer up a bargain, but once again demand is high and rental income consistent, so even if a property is a big investment to begin with the high rents that can be charged make it highly worthwhile.

Another thing for landlords to bear in mind is the rising population of London and the increased demand for rental homes in the capital. By 2030 London’s population is set to reach 10 million, up from the current total of around 8.7 million people. Some predictions suggest that this could rise to 11 million by 2050.

At the same time, more people are now choosing to rent than ever before, particularly in London. According to the Royal Institution of Chartered Surveyors (RICS), around 1.8 million more households in the UK will be looking to rent by 2025. From 2001 to 2014, the number of people renting rose rapidly, from 2.3 million to 5.4 million in 2014.

With so many jobs, graduate schemes and opportunities concentrated in London, people from all over the country (and the world) decide to move here to work or study. Many of these are private renters. The projected rise in population will further increase the already high number of renters battling for properties in the capital.

Long void periods are therefore highly unlikely in London, which should act as a reassurance to those thinking about investing – or expanding their portfolio – in the capital.

For more information about letting property in London, and what JBrown can do for you, please get in touch with us on 0207 099 5105.

To find out how much you could be charging in rent, request a free instant online valuation.