London is in the grip of a buy-to-let frenzy as sales soar by 72 per cent
10-08-2015
The number of buy-to-let sales has soared by up to 97 per cent in some parts of the capital, as tax changes do little to dampen the appeal of putting spare cash into property...
£435,000: the rental income from this two-bedroom flat in Brixton, where property values are rising fast, could cover mortgage repayments. Through KFH (020 8012 2746)
London remains in the throes of a buy-to-let boom, with the number of sales soaring by almost 72 per cent in the past year. Data from Equifax Touchstone, which analyses mortgage figures, found investment buys across London in August of this year were up 71.7 per cent year-on-year.
The number of buy-to-let sales in London’s central WC postcodes and across north-west London more than doubled in the same period — with sales rocketing up 112 and 103 per cent respectively.
Meanwhile, in central-east London, buy-to-let sales were up almost 97 per cent, and south-east London’s buy-to-let purchases were not far behind at 93 per cent.
Buy-to-let also increased, though at a more modest rate, in east, west, south-west and north London.
The increases come despite surprise tax changes introduced by George Osborne in July’s budget, which removed the perk of being able to deduct mortgage interest payments from rental income when calculating a property’s taxable profit. This could, in areas where prices are high and mortgage yields relatively low, wipe out the entire income from a buy-to-let property. But this threat does not appear to have dampened the appeal of putting spare cash into property with the prospect of both capital gains and a healthy rental return.
The number of buy-to-let sales in London’s central WC postcodes and across north-west London more than doubled in the same period — with sales rocketing up 112 and 103 per cent respectively.
Meanwhile, in central-east London, buy-to-let sales were up almost 97 per cent, and south-east London’s buy-to-let purchases were not far behind at 93 per cent.
Buy-to-let also increased, though at a more modest rate, in east, west, south-west and north London.
The increases come despite surprise tax changes introduced by George Osborne in July’s budget, which removed the perk of being able to deduct mortgage interest payments from rental income when calculating a property’s taxable profit. This could, in areas where prices are high and mortgage yields relatively low, wipe out the entire income from a buy-to-let property. But this threat does not appear to have dampened the appeal of putting spare cash into property with the prospect of both capital gains and a healthy rental return.
A spokesman for Equifax Touchstone says investors had been encouraged by the UK’s stronger economic outlook, rising rents and continuing low interest rates.
“Investors entering the London market are predominantly cash-rich buyers from overseas, particularly from the Far East,” adds Stuart Law, CEO at buy-to-let agent Assetz for Investors. “They choose London because they see this property market as a safe-haven for investment.”
British buyers are also keen on London property. “Many people have a dogged belief that property will always deliver,” says Kate Faulkner, property analyst at propertychecklists.co.uk, despite the fact that income is, currently, low.
Law estimates that the typical yield earned on a buy-to-let in London is about three to four per cent (compared to about seven per cent in Manchester, where property prices are lower). In central London, this can slip to as little as two per cent, according to Rob Weaver, director of property at crowdfunding company Property Partner. But investors are banking on the value of the property rising.
Buying agent Caspar Harvard-Walls, a partner at Black Brick, says even extremely wealthy investors currently prefer property worth £1 million or less to reduce the amount of stamp duty they have to pay. They would prefer to buy several smaller flats, rather than one big one.
“The yields are better on lower-value investments and the void periods are shorter as these smaller flats are in constant demand,” he adds.
Jonathan Monjack, CEO of management firm The Happy Tenant Company, says homes along the Crossrail route from Whitechapel to Woolwich are popular with investors, while Jo Eccles, managing director of Sourcing Property, believes markets are hot in Clerkenwell, Islington, Brixton, Brook Green, Ealing and Pimlico.
Last month, the Bank of England warned that buy-to-let poses an increasing threat to Britain’s financial stability because buyers are pushing prices upwards in a way that could fuel a housing crash.
“Investors entering the London market are predominantly cash-rich buyers from overseas, particularly from the Far East,” adds Stuart Law, CEO at buy-to-let agent Assetz for Investors. “They choose London because they see this property market as a safe-haven for investment.”
British buyers are also keen on London property. “Many people have a dogged belief that property will always deliver,” says Kate Faulkner, property analyst at propertychecklists.co.uk, despite the fact that income is, currently, low.
Law estimates that the typical yield earned on a buy-to-let in London is about three to four per cent (compared to about seven per cent in Manchester, where property prices are lower). In central London, this can slip to as little as two per cent, according to Rob Weaver, director of property at crowdfunding company Property Partner. But investors are banking on the value of the property rising.
Buying agent Caspar Harvard-Walls, a partner at Black Brick, says even extremely wealthy investors currently prefer property worth £1 million or less to reduce the amount of stamp duty they have to pay. They would prefer to buy several smaller flats, rather than one big one.
“The yields are better on lower-value investments and the void periods are shorter as these smaller flats are in constant demand,” he adds.
Jonathan Monjack, CEO of management firm The Happy Tenant Company, says homes along the Crossrail route from Whitechapel to Woolwich are popular with investors, while Jo Eccles, managing director of Sourcing Property, believes markets are hot in Clerkenwell, Islington, Brixton, Brook Green, Ealing and Pimlico.
Last month, the Bank of England warned that buy-to-let poses an increasing threat to Britain’s financial stability because buyers are pushing prices upwards in a way that could fuel a housing crash.