Buy to let is booming, especially in the South East, with this sector of the market accounting for approximately 30 per cent of property sales in such places as Crystal Palace, Surrey Quays, Southgate, Belsize Park, Kingston and Wimbledon.
So says Lee Watts, managing director of independent London estate agents Kinleigh Folkard & Hayward on the back of the firm’s latest buy to let report.
‘When it comes to the reasoning behind the purchases, there appears to be a pattern developing. The majority of all buy to let purchases last year were made by those looking to safeguard their pension. Many are in their 40s, 50s or 60s see property as offering a better return than bank accounts, bonds or other investment vehicles’.
Estimated rental yields are put at highest in Crouch End (6 per cent), Clapham (5 to 8 per cent), Dulwich Village (6 per cent), Southfields (5 to 7 per cent), Streatham (6 per cent), Brockley (6 per cent), Bromley (6 to 8 per cent) Crystal Palace (6 per cent), Chislehurst (8 per cent), Hayes (6 to 8 per cent), Lee (6 to 7 per cent), Peckham, (6 to 9 per cent), Surrey Quays (6 to 8 per cent), and West Wickham – where retirement flats are bringing an estimated 8 per cent return.
Many of these areas have also seen substantial rent increases and property price increases over the last year.
KFH puts the rent increase in Bromley at between 5 and 10 per cent, in East Dulwich at 12 per cent, and Crouch End 8 per cent.
House prices have gone up by 10 per cent in Dulwich Village but by a whopping 25 per cent in Clapham, 15 to 20 per cent in Belsize Park and Peckham, and 14 per cent in Marylebone.
In Streatham, where buy to let accounts for 20 per cent of property sales and rental yields are put at 6 per cent in the last year, local KFH sales manager Simon Stone says typically buy to let investors in the area are buying with a large proportion of their own money – ‘if not 100 per cent cash then at least 50 per cent’.
The properties ‘tend to all be two or three bedroom flats, split equally between conversions and purpose built’, he said.
In West Wickham buy to let accounts for only 9 per cent of property sales.
‘West Wickham is more of an area where families buy for the schools so we don’t get many investors who buy here’, explains KFH local sales manager Lindsey Steel.
‘If they do, they tend to buy flats, including retirement flats. These have the best yields at around 8 per cent. You would never really think of buying a studio retirement flat for an investment but you can pick one up for between £40,000 and £50,000 and they tend to rent for between £550 and £600 per calendar month.