Opinion

Buy-to-Let Purchases on The Up

More and more people are taking advantage of buy-to-let real estate investment opportunities in London, according to experts. Cluttons claims that despite falling rental demand and rents in the capital, purchases of property with the intention of letting have increased. In the property consultant's Q4 Residential Investment Monitor, buy-to-let investors made up almost 15 per cent of sales activity in London during 2012.

Cluttons head of research, Sue Foxley, commented: "Despite the expectation of further rental falls during the first quarter of 2013, investors remain unfazed and are taking a long-term view to purchases. Over a quarter of households in London live in private rented accommodation and the research undertaken for Cluttons by Professor Ball, of the University of Reading, found that this number will grow as home ownership moves out of reach for a growing proportion of Londoners."

As property ownership becomes a distant prospect for people in the capital, there is likely to be a surge in rental growth over the next decade. Ms Foxley claims it is therefore "understandable" that investors are thinking ahead and building their portfolios now. However, over the near-term, the fall in rental values cannot be ignored. During the final quarter of 2012, average rental values plummeted by 2.3 per cent. Average weekly rents stood at £996 - the first time they have fallen below £1,000 since the first quarter of 2011.

Those areas traditionally the most popular with prospective tenants haven't escaped the market decline either. Belsize Park and St John's Wood - known for their outstanding rental growth - experienced some of the greatest falls, registering six per cent and 5.4 per cent losses respectively. This means that average weekly values are currently down by 2.3 per cent on January 2012 levels.

Nevertheless, east and south London submarkets are proving themselves to be popular among investors, according to Ms Foxley, and buyers from the Asia Pacific remain active.  This is being supported by lenders, who have shown an eagerness to support buy-to-let investments over the last 12 months.

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