While some commuter towns are faring poorly as buy-to-let investments, Colchester is top of the list of best places to invest in buy-to-lets. Its ranking is based on growth in capital value, volume of sales, and rental price, as well as rental yield. According to the latest LendInvest index, Colchester showed a 9.98% capital gain, 3.71% yield, 3.41% rental price growth and 2.79% growth in sales volumes. Northampton was in second place, with Leicester, Luton, Birmingham and Manchester also faring well. However, Crewe, Ilford in Essex, much of London and commuter towns like Dartford and Romford performed poorly.
LendInvest sales director, Ian Boden, said the index shows where the slowdown in house price growth is having the most effect and where opportunities for investment can be found. Overall, the South West and the Midlands are good areas to consider. However, Mr Boden expects investors to take a long-term view when weighing up how profitable their assets will become. Other research has indicated the North West as a good place for investment because of high demand for rental properties as well as low prices compared to the rest of the country.
Although London has been out of favour, with falling rents and expensive housing, new analysis shows rents in central London’s prime postcode areas rose by 0.2% in February and March. This is the first increase since September 2015. According to the latest figures from Knight Frank, average rents in this area have fallen by 1.5% in the 12 months to March 2018, which is the lowest rate for about two years. The company predicts average rents will now increase. The supply of new lettings has dropped by 5% compared to last year for a number of reasons, particularly tax changes coming into effect. London Residential Research head, Tom Bill, said that letting properties made up 71% of sales and lettings listings combined in central London in July last year. However, in February 2018, it had dropped to 62%. That comes at a time when tenant demand is growing, which could put pressure on rents. In the 12 months up to February, there were 16% more prospective tenants registered, compared to the previous 12 months.
Out of central London, Portico has suggested up-and-coming districts with more affordable property prices. These include Acton, which has good transport links to central London and is considered a good choice for families. Blackhorse Road is also seen as a top choice for young professionals for its trendy vibe, along with good overground and underground links to central London. Portico pinpoints Leyton as being next for regeneration with gastro-pubs and trendy cafes starting up and reasonable house prices. Other districts in London which are being regenerated will also be worth investigating from an investment point of view. Since the BBC left the Media Village in White City, a lot of work has been going on to transform this district. As well as trendy office spaces, independent cafes and shops, there is also the Westfield shopping mall, offering an alternative retail centre to central London.
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