Buy-to-let sales were quite slow over the summer but are now on the rise. At Maskells we are now registering over 40 applicants a month who are telling us that the property will be a buy to let.
We are seeing two types of buy-to-let investors. The first is looking for a long-term safe haven for their cash, particularly given the recent and rapid increase in population in some European countries which has led to the belief that domestic taxes will increase to cover higher social benefits costs.
The other is the more traditional investor who see London as a good investment, not only for the annual yield (around 3% in Chelsea) but also for the 5%+ per annum capital growth expected; a total return of nearly 8% gross.
The split of buy-to-let buyers is in favour of the international buyers over domestic buyers by around 70/30. The international buyers tend to be over 50 years old with a large proportion coming from France. The Maskells language skills are certainly coming into use!
The low yield environment has forced many savers to look at property investment for income and capital growth. With its strong track record of growth and low leverage, the prime central London market is attractive to them, and very few are taking out mortgages.
The key to buy-to-let for savers as oppose to professional landlords is to avoid price volatility in the market in which they are buying. As such, investors should seek areas with low leverage to protect their capital.
We are seeing increased demand for the sub £1,000,000 market one bedroom flats in Chelsea and South Kensington and increasing demand for 2+ beds at the £1,500,000 market. These attract rents which are affordable for London professionals ensuring void periods are kept to their minimum.