Landlords reap strong returns from outer London properties

Attractive mortgage rates and a thriving market have prompted buy to let investors to expand their portfolios into outer London; achieving strong returns as a result

According to data from London estate agent Fraser & Co, buy to let prospects in the capital are really taking root with domestic home buyers who are capitalising on the greater returns they can achieve.

They highlighted key areas for investment as those lying just outside London’s central region (zone 1) and where good transport links existed to more central parts of the city.

“As buy to let mortgages become more appealing, we expect to see domestic investors nipping at the heels of their international counterparts, allowing areas in zone 2 to continue to thrive and extend out towards zone 3,” said Robert Fraser, the estate agent’s Managing Director.

“Where there is redevelopment and good transport links to central London, there is significant growth potential.”

The wider picture

As well as noting increased interest from buy to let landlords in outer London properties, recent research from Knight Frank has also shown that lucrative opportunities still exist within London’s prime rental market.

Figures released in February showed that values rose for the twelfth consecutive month; growing by 0.2 per cent.

Key areas included St John’s Wood, Hyde Park and Kensington where rents were up at respective rates of 10.8 per cent, 8.0 per cent and 7.8 per cent.

South Kensington, Belgravia, Notting Hill, Knightsbridge and Chelsea also recorded rent growth of between 0.2 per cent and 6.1 per cent while Marylebone had the largest recorded increase of 12.4 per cent.

Some of these areas also experienced flat house price growth – providing great opportunities within buy to let.

While prices in Southwark and Hackney grew by 5.6 per cent and 4.1 per cent last month, according to Fraser & Co, Chelsea, Kensington and Camden were just a few areas to experience negative growth or no change at all.