Published: 16/02/2022 By Katherine McDowall & Mateo AsminianTimes like these make us firm believers that, no matter how big or dark the cloud, there is always a silver lining…
Over the last few years, London landlords have faced a number of challenges in the property market, from Brexit and increased tax changes to the pandemic causing a mass exodus of space-seeking tenants from the city and rents taking a hit.
The past few months, however, have seen levels of demand skyrocket as offices have re-opened and the increasing ease of travel has allowed a release of pent-up demand – and this may only be the beginning of this trend. The start-of-year activity has been very promising, with Zoopla reporting that UK rental demand was up 76% in January compared with similar periods between 2018-2021. Lack of stock is partially to blame (or thank) for this unusually high figure: the number of available rental properties in Chiswick usually sits at around 450 on average; today, there are only around 100 properties seeking a new tenant!
Rents have consequently reaped the benefits. Zoopla have reported London rents increasing by 10.3% year-on-year… and we know a handful of W4 properties are achieving even more!
The sales market remains two tiered. The demand for 3+ bedroom, family houses is robust, withstanding the end of the Stamp Duty Holiday incentive and the more recent impact of rising interest rates, and many are selling at premium prices as a result of multiple bids.
The flat market, on the other hand, will need some patience in its recovery. The strict travel restrictions and the Furlough scheme (and its conclusion) meant a large chunk of first-time buyers and pied-a-terre seekers have been opting against the first/next step on the property ladder. Given these buyers combined account for almost two thirds of flat sales across the board, it is no surprise that there are three times as many flats than houses on the market in W4, and their prices have plunged some 11% on average since the start of the pandemic. Garden flats remain strong in demand and sturdy on price, but many of those without outside space depreciated back to their 2014/15 values at the height of the pandemic.
This market has shown some signs of improvement since the turn of the year. Buyer registrations for 1&2-bedroom flats are up some 7% year-on-year, and this growth will inevitably improve further in the short term – maybe as early as the second half of this year – as Covid’s impact wanes and we slowly but surely resume our ‘normal’ lives.
The message is clear: investors, now is the time to buy. The contradicting trends of the lettings and sales markets specifically for flats (which comprise approximately 80% of all rental properties in W4) means yields are at their strongest since the credit crunch in 2008! Buy-to-let mortgages can currently be fixed for as little as 1.09% for 2 years and 1.64% for 5 years. This opportunity might never come around again…
Here are some properties we are selling that can serve as evidence:
Current sales properties with monthly rental income and gross yields
Sales asking price – £379,950
Monthly rental income – £1250pcm
Today’s rental value could guarantee you a rental yield of 3.9%
St Catherine’s Court
Sales asking price – £550,000
Monthly rental income (as is) – £1900pcm
Today’s rental value could guarantee you a rental yield of 4%
Monthly rental income (with some works) – £2300pcm
With improvements, in today’s market, you could see a yield of 5%
Sales asking price – £585,000
Monthly rental income – £2000pcm
Today’s rental value could guarantee you a rental yield of 4.1%
Sales asking price – £675,000
Monthly rental income – £2500pcm
Today’s rental value could guarantee you a rental yield of 4.4%
Sales asking price – £685,000
Monthly rental income – £2700pcm
Today’s rental value could guarantee you a rental yield of 4.7%
*Yields are calculated against current asking prices and may vary (subject to negotiation)