Is it the right time to invest in Central London?

Property market round-up Spring 2016

Sara Ransom of Stacks Property Search in London examines the London investment market, and makes recommendations for investments at a range of budgets.

Central London investors are generally buying for long-term appreciation rather than short term gains. Lack of confidence is the main driver that makes markets vulnerable, and there will always be confidence in the central London market which has proved itself time and time again to be virtually market-proof. Prices will rise and fall, driven by demand, but there will always be a quick bounce back.

So what makes an investment a solid one?

Your choice of investment is crucial. Location is the most important part of the equation. Depending on your budget, look at what your money can buy in various areas. Select the best location given your budget, and the best property in that area that your budget can stretch to.

Remember to factor in ease of resale, potential for improvement, and capital growth. And as a successful investment relies on easy letting, select your property by anticipating tenant profile.

The examples here give you some ideas about how to select a good rental investment in various price brackets, and demonstrate the process by which it’s wise to make your selection.”

How much:       £650,000

Where:  Prime parts of SW4, e.g. Clapham South, Abbeville Village

What:    First or ground floor apartment with two double bedrooms of fairly equal size, two bathrooms and a garden.

Tenant profile:  Graduates and young professionals

Why?:   Large pool of potential tenants and reliable, regular income

Avoid:   Basement or top floor. Anything too polished – it won’t pay dividends in terms of rental income

How much:      £650,000 – £850,000

Where: Rotherhithe Village SE16

What: Two bed riverfront flat or warehouse style loft apartment

Tenant profile:  City workers, often for only weekly use

Why: Good capital growth potential (Elephant & Castle and Bermondsey regeneration schemes), and fantastic transport links (Jubilee Line and London Overground)

Avoid:  Ex-local authority, busy roads, being too far from transport

How much:    £850,000 – £1.2m

Where: Hampstead Village or prime Pimlico

What:  Good 2 bed flat in prime streets

Tenant profile:  Young couple working in the City, bankers, lawyers, DINKYs, high disposable income, very active social life

Why: Their priority will be location – ease of access to entertainment, local restaurants / bars / shops is crucial

Avoid: Basement or top floor if period. Don’t be tempted to sacrifice location for size.

How much:   £1.5m – £2m

Where:  SW11, SW12, SW4. Wandsworth, Northcote Road, or close to any of the Commons

What: Family houses

Tenant profile:  Young families looking for good sized houses in preferred school catchment areas, both state and private

Why:  Local parks, easy access to M4 and M3, long tenancies, less void periods cutting down management costs and administration.

Avoid:  Roads which miss out on the catchment for good schools. Large house but tiny garden.

How much:    £2m – £3m

Where: Chelsea, South Kensington, Kensington, SW3, W8, SW7, W11

What: Two and three bedroom flats, raised ground or first floor, preferably with access to communal gardens, roof terrace or balcony

Tenant profile:  Mid-career professionals without young families, or out-of-Londoners who want an occasional London base

Why:  Long tenancies, great long term capital growth

Avoid: High service charges, short leases, mansion buildings with dilapidated communal areas.