Landlords are looking elsewhere for higher yielding property investments as the London rental market begins to slow down.
The National Landlords Association’s (NLA) Quarterly Landlord Panel for Q4 2016 found that tenant demand in the capital fell by 30 per cent year on year, down to 17 per cent from 45 per cent. This has led to landlords casting their nets further to seek higher yielding investments.
The South East is one of the areas set to be targeted by investors, with 40 per cent of landlords in the South East reporting a rise in tenant demand during the last quarter of 2016. This was the highest reported in the UK, and suggests that tenants are increasingly looking towards the suburbs as London prices fall out of reach.
As the perception of a slowdown in tenant demand in the capital grows, landlords appear to be adapting their purchasing plans in the near future. Five per cent of London landlords said they they plan to purchase more properties in the next quarter, the lowest figure nationwide and down annually from 15 per cent.
In contrast, the number of North East landlords who plan to buy in the next three months has almost doubled in a year from 10 per cent to 19 per cent. The proportion of Yorkshire landlords looking to expand their portfolios has also grown from 10 per cent to 16 per cent.
Chair of the NLA, Carolyn Uphill, said: ‘It looks like central London is simply becoming too expensive for most people, regardless of whether you want to buy, invest or rent. For many tenants the practical solution of moving out of the city to more affordable suburbs with good transport links is becoming increasingly appealing. In turn, it seems that landlords have been quick to respond, turning their backs on the capital and looking to other areas where the upfront cost of acquiring property is lower, and the potential yields to be had are higher.’