Rising London rents prompting return of buy-to-let investors

Buy-to-let landlords are returning to London in droves to take advantage of rising rents and therefore yields, Chestertons’ market review indicates.

Half of property sales made by the London estate agent at its South Kensington branch were to buy-to-let investors.

Meanwhile the agency’s Tower Bridge office, which also covers the areas of Bermondsey, Canada Water and Wapping, has witnessed an uplift in buy-to-let landlords of 20% compared to this time last year.

Richard Davies, managing director of Chestertons, said: “Although the current spike in investors appears to focus on the micro-markets of South Kensington and Bermondsey, with the substantial uplift in rental prices, we are expecting to see more landlords returning to other parts of the capital.

“The market had become increasingly challenging for buy-to-let landlords and, with the decline in private landlords, London inevitably saw a reduction in the number of properties available to rent.

“This intensified an already competitive market, in which demand heavily outstripped supply. With investors returning, London renters may soon be able to choose from a larger selection of properties again.”

Zoopla’s latest Rental Index shows that London’s average monthly rent now stands at £1,698, a 15.7% increase since last year.

Chestertons predicts London rents will continue to rise.

Tony Gambrill, area director at Chestertons, said: “The stamp duty surcharge of 3%, introduced in 2016, as well as landlords no longer being able to get a full tax relief on mortgage interest, has led to a gradual decline in buy-to-let landlords.

“Although these tax rules are still in place and interest rates have gone up, bricks and mortar is still seen as one of the safest investments and we are now witnessing more investors returning to the market, wanting to diversify their portfolio and protect themselves against rising inflation.”

Some 60% of tenants believe that rents will go up in the next year, 16% think rents will go down and 24% believe they will stay the same.

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