How to invest in Central London
Sara Ransom of Stacks Property Search says, “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.
“Fears about an impending Mansion Tax that are now a distant memory with a Conservative Government installed will certainly boost the upper end of the market. 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, raods which miss out on the catchment for good schools.