London’s Rental Market in a Nutshell

London letting and estate agents Foxtons are telling landlords what type of property not to buy, even though the advice could knock their sales. 

The property business says (November 2018) that buy-to-let landlords should steer clear of ground-floor flats. 

The firm says landlords letting these flats suffer losses as the rental premium - a comparison of the buying price of a square foot with the rental value of a square foot - is running at -9.4%. 

This means landlords are paying more for a lesser return than other flats. But flats on the raised ground floor - typically accessed up a flight of steps - have a rental premium of 6.2%, while basement flats come in at 4.7%. 

What else does the letting agency say that might help landlords? Well, the upcoming rental hot spots are Hornsey, Hayes and Leyton. Still, the average house prices for investors are off-putting at £536,718 in Haringey (Hornsey), £407,751 in Hillingdon (Hayes), and £440,455 in Waltham Forest (Leyton).

But the highest rental yields come from East London’s boroughs of Barking and Dagenham - at an average of 4.5% and an average property price of £325,048 in 2018. Newham, Tower Hamlets and Greenwich take the other top places. 

Transport for London’s Zone 2 is most popular with buy-to-let renters, averaging rents of £459 a week, compared with Zone 1’s £554 and £394 for Zones 3 -6. 

Foxtons says new tenant registrations in the capital were up 8% last year, but properties available to rent dropped by 11%. Properties returning the most significant year-on-year rent increases were three-bedroom flats - up 3.9% to £658 a week.

Source: Foxtons/Dataloft