The number of landlords in the capital opting to re-let their property grew last year by over 10 per cent, according to new analysis from Knight Frank.
Despite the impact of recent tax changes on the buy to let sector, London saw a 10.1 per cent rise in the number of properties available to re-let in the year to August 2017. The data, which looked at new tenancy agreements and excluded extension deals with existing tenants found that landlords were beginning to see key benefits in long term property ownership.
Recent changes affecting landlords range from the reduction of tax relief on mortgage interest, as well as the loss of the wear-and-tear allowance for rental properties. Finally, the 3 per cent stamp duty surcharge for buy to let investors has been a significant blow.
Despite these changes, buy to let continues to impress as an investment. Although there is growing speculation about a potential interest rate rise in the UK, rates are likely to remain low by historic standards in the medium term. This also implies that yields on investments such as cash and government bonds will also remain low. In contrast, Knight Frank asserts that landlords are seeing average gross yields of around 3.2 per cent in prime central London.
Head of Knight Frank’s lettings division, Tim Hyatt, explained: ‘We see no signs of an exit. Buy to let investors typically hold properties for an average of 16 years and most professional investors will ensure their portfolio is able to weather such storms.’
Head of London Residential Sales at Knight Frank, Noel Flint, emphasised the long term benefits of property investment as a reason many landlords are choosing to remain in the market: ‘The reason we are not seeing many landlords come to the sales market is because they know there is nowhere else to put their money at the moment and they appreciate that property is a tangible asset that will always be income-producing.’