There are many places which are considered the best and brightest for property investments, and London has long been one of them, alongside other key areas like Paris, New York, Los Angeles, and more. But what makes London stand out and remain different from the aforementioned areas is its dynamic character. London has always been evolving, and this evolution has made it the dream property market of many – but this evolution has made it quite volatile and tricky as well. In order for you to be lucky enough to find property in London and make a more-than-decent profit from it, you need to know what makes the London property market tick.
Here’s one thing you should know, first and foremost: London is a complex area because you aren’t just dealing with a single property market – you are dealing with a series of sub-markets, and these markets tend to overlap. And different areas are good for different things as well – for instance, one area which you may consider great for buy-to-let property may not be great for residential property, and vice versa. So, what should you know about the property market in this great city before you make that property investment? Here’s your essential guide to the property market in London.
It is expensive
There’s no doubt – London is expensive. It is, after all, the area which has the highest and most expensive property rates in the United Kingdom. But despite the expense, it is an attractive deal for most property investors. If you would like to invest in a buy-to-let property, for example, you should be aware that demand is huge for property for rent in London, so you shouldn’t run out of prospective tenants. Also, property in London has an excellent track record – it rises in value every single year, and this makes it different from other areas in the country with cheaper properties.
More on property rental rates in London
It, therefore, follows that London property can boast higher rental rates than other areas, which bodes well if you are thinking of making a property investment. But here’s another key tip: rental rates tend to be higher as you move closer to the centre of the city, but the price for property in these areas is higher as well. On the other hand, as you move further away from the city, the cost of property tends to decrease, but this doesn’t mean that rental rates are lower; as a result of this, your yield on your property rental could be higher.
The effect of transportation links on your property investment
Transportation links can also have quite an effect on your property investment in London, as London property experts such as Gerald Eve readily confirm. For one, areas which are easily accessible to rail stations or tubes, even if they may be farther out, can fetch higher rents and prices than other areas which are cheaper but farther away from transport links. Commuters tend to gravitate towards areas which are not more than 30 minutes or half an hour away from the centre of London.
Know how to calculate your yield
If you would like to invest in a buy-let-property, you have to know how to calculate your yield as well. To know your estimated yield, take your potential property’s purchase price and then make an estimate of the probable rent you would get from it per month. Then simply multiply this number by 12 so you can find your rental figure per year. Afterwards, divide your yearly rental figure by the property’s purchase price and then multiply it by a hundred so you can get your yearly yield (as a percentage). With this, you can compare different property opportunities in any area of London.
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