Potential buy-to-let investors in London should avoid buying ground-floor flats, according to a lettings agency report.
Three-bedroom properties have also seen the biggest rise in average weekly rent, the 2018 lettings report from Foxtons has claimed.
Which? takes an in-depth look at the report and explains what potential buy-to-let landlords should consider before investing in a London rental property.
‘Raised ground’-level flats command highest rental premiums
According to Foxtons, buy-to-let landlords renting out standard ground-floor flats are suffering losses, with the ‘rental premium’ – the buying price per square foot compared with the rent per square foot – commanded by such properties down at –9.4%.
In contrast, the premium for ‘raised ground floor’ flats (properties above street level, often accessed by a flight of steps) is 6.2%, and it’s 4.7% for ‘lower ground’ (i.e. basement) flats.
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What difference does size make?
Three-bedroom flats experienced the biggest year-on-year increase in average weekly rent, growing by 3.9% to reach £658 per week in 2018, according to the report.
|Type of flat||Average weekly rent in 2018||% change 2017 to 2018|
Zone 2 most popular with renters
According to Foxtons, the strongest growth in weekly rent has been in Zone 1, where the average has grown by 3.9% year-on-year to hit £554 in 2018.
In Zone 2 rents average £459 per week – an increase of 1.7% – and in Zones 3-6 it’s £394 (2.2%).
Zone 2 properties attracted the most interest from renters, with 41% of the prospective tenants registering with Foxtons in 2018 requesting a Zone 2 location.
By comparison, 29% of tenant registrations were for Zone 1 properties and 30% were for Zones 3 to 6.
The overall number of tenant registrations rose by 8% in 2018, but the number of properties coming to the market dropped by 11%.
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London’s buy-to-let hotspots
In a recent blogpost, Foxtons singled out Hornsey, Hayes and Leyton as upcoming buy-to-let hotspots.
According to the UK House Price Index, the average house prices in the local authorities these boroughs are based in are £536,718 in Haringey (Hornsey), £407,751 in Hillingdon (Hayes), and £440,455 in Waltham Forest (Leyton).
Last month in a separate blog Foxtons singled out Barking and Dagenham, Newham, Tower Hamlets and Greenwich as the top four London boroughs for rental yields this year.
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