The race is on for landlords. With increasing house prices and low yields on properties in many central London locations, buy-to-let investors are seeking new areas to put their money. But where should they be looking and what do London’s so-called emerging hotspots have to offer them?
Various reports in recent weeks have suggested several areas, such as Clerkenwell and Peckham as good locations for buyers. Once considered more downbeat areas, they have first seen people who work in creative industries move into them, followed by those working in finance and other professions. The look and feel of these areas are being transformed as a result of this extra focus and energy.
One of the things that the emerging areas in the capital have in common is that are heading out towards Zone three or four on the London Underground map – if they are not there already.
These areas continue to provide tenants with the necessary good transport links required to live and work successfully in London, while at the same time offering landlords cheaper property prices than in the centre of the city.
Property values are rising quickly in emerging areas that come under the buying spotlight.
Take, for example, South Acton, which recently topped a list of locations in London where demand is so high among house hunters that the average price of a home has pushed past the £500,000 mark during the past year. The list also included Peckham Rye and Dalston as well as Pinner and Surbiton Hill.
As these areas become more fashionable, there is increasing demand for rental properties. For instance, typical rents in places in Clerkenwell are almost £600 a week. Further out of the centre, they are lower than this – but they are still strong.
The good news for landlords looking to invest in London does not stop there as agents are reporting an increasing trend in light of this shift in focus to decidedly ‘edgier’ areas of town.
They suggest that tenants are willing to sign up to longer contracts as a result of the higher competition for places to rent.
As many as half of tenants are agreeing contracts that are longer than 12 months in areas such as Clerkenwell as they embrace these emerging hotspots.
The longer contracts mean tenants can secure homes in these areas, while landlords get to enjoy guaranteed rents over a longer period – something that can work well for buy-to-let investors who are happy with their tenant and are investing for the longer term.
Check out our London Property Insights where we’ve compiled a guide to property prices across London to help you choose the right borough to invest in.