London, one of the top residential property markets in the world, continues to figure among the top-5 destinations in the UK for investments into buy-to-let (BTL) sector.
According to the latest Buy-to-Let City Tracker from Aldermore Bank, London continues to perform well across several parameters, such as average total rent, the best short-term returns through yield, long-term return through house price growth over the past ten years, the lowest number of vacancies as a proportion of total housing stock, and percentage of the city population in the rental market.
What makes London BTL market attractive is that property prices have increased faster at 5.5 per cent a year on average over the past decade. The rental prices are strong at £630 per room per month while the property prices in London (£617,238 on average) are high compared to rest of the UK. Annual rental yields of a new buy-to-let purchase starts from 3 per cent. In 2019-20, the rental growth was 4.4 per cent, one of the highest for any UK city.
Corporate companies, international travellers, businessmen, medical tourism, students and UHNWIs are some of the key growth drivers of the BTL market in London. Consequently, many companies, backed by institutional investors, are investing in the London BTL market. Anticipating higher demand, landlords are also expanding their BTL portfolio in London.
Damian Thompson, Director of Mortgages, Aldermore comments: "Aldermore’s Buy to Let City Tracker shows there are still great short and long-term investment opportunities for landlords. The number of people renting in the UK has been rapidly growing, up 1.7 million in ten years, so private landlords are an increasingly central part of the housing market as supporting a robust and strong Private Rented Sector becomes more essential."