With properties in traditional West London worth more than £240m having been sold in the past few months, it’s clear that property prices in the Capital are still rising. We see house prices continuing to increase, as rental demand is being further fuelled by lenders applying much more stringent requirements for mortgage applicants to buy properties. Many lenders now require the last three month’s bank statements in order for them to check on the spending habits of the applicants. According to Savills Estate Agency (Clark, R 04/05/2014 Sunday Times), it was stated that the average gross yield for a property in central London is around 3.2%. With one in six of these properties the gross yield average drops down to 2.5%, leaving investors with a remaining 1% after letting costs, if they are lucky! Therefore from Clark’s article, we can see people moving away from central London.
At Embrace we are finding that multi-let properties within the Coventry and Warwickshire areas can generate in excess of 20% Return on Investment (ROI) pa. This is achieved by renting each room out to individuals on separate rental contracts. In Coventry there is huge demand for rental accommodation, due to many local companies in the high technology areas expanding, two universities, regeneration of the area and high requirements from LHA personal. Additionally, here in Coventry we are fortunate enough to be in commuter belt from the Capital and are only two train stops away from London Euston. The commute is only a little over 50 minutes, allowing people to work in London, earn London salaries, but paying Coventry house prices (falling anywhere between one third and one fifth of the cost of similar properties in London).
At Embrace we are finding that a large selection of our clients are London based who require us to source investment properties for them through our property sourcing service. They see Coventry as a very attractive area to invest and to build portfolios of buy-to-let properties for renting out as multi-lets, which maximises their rental income and ultimately their Return on Investment (ROI).
- Peter Iwaniszewski