Buy-to-let demand in prime central London showing signs of ‘resurgence’

There has been increased demand for buy-to-let property in prime central London in recent months and this trend looks set to continue in 2019 as rental yields improve, according to Black Brick.

The independent buying agency points to the latest data released by Knight Frank which shows that rental yields in prime central London are currently at a six-year high; an attractive proposition for buy-to-let landlords.

The average rental yield achieved in prime central London in December was 3.35% - the highest level seen since April 2012 as a result of rising rents and downwards pressure on prices, said Knight Frank, in its latest monthly report.

The property firm reports that letting activity across prime London markets has remained firm despite the current uncertain political backdrop, with the number of new tenancies in November increasing by 12.3% in comparison to the corresponding period last year.

Knight Frank reports that average rental values in prime central London increased by an average of 1.1% in December in response to falling levels of supply, prompted by landlords seeking to sell their properties in response to recent tax reforms.

But while supply continues to fall, the number of new prospective tenants registering in prime central London has been on an upwards trajectory since the start of the year, suggesting that rents will rise further in 2019.

There has been similar upwards pressure on yields in prime outer London as rental value declines bottom out. An average gross yield of 3.5% in December was the highest recorded since March 2015.

Black Brick partner, Caspar Harvard-Walls, commented: “We are seeing something of a resurgence in buy-to-let enquiries compared with a year ago, and we are sourcing deals offering yields between four and five percent.”

However, he adds that, with reductions in mortgage tax relief, such investments are considerably more attractive to landlords who can buy mostly or entirely with cash.

“With rents set to rise perhaps 15% over next five years, this part of the market should see a bounce,” he added.

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