Rent to Buy – Property Rental in London Č In London, the vast majority of property purchases in the private sector are made by overseas investors. For those seeking a bricks and mortar property investment in the UK, London property rental usually makes ideal ‘catch-22’ investment opportunities providing return on investment and a parking space for their new property.
London’s property rental returns continue to upgrade and remain at the forefront of prime London property investment. Obviously, property height and quality still have a significant market advantage, which both UK and Overseas property investors need fully to maximise their return.
London’s property rental returns are generally higher than other parts of the country as individuals require a property at least ‘ready or available for immediate occupation’. The UK rental survey season starts late in May / early June and finishes at the end of July, there is effectively no guarantee that short term property rentals will be available in good locations at these times, especially if someone is looking to live in a flat or house. For those choosing London as a major investment location for property, a good property agent would be aware of short term property rental offers available and perhaps even negotiate on their behalf to ensure that a property is reserved for clients.
Off-plan investment choices also ensure that investors gain the benefit of a guaranteed rental income during the construction or pre-leasing phase. Property prices may have risen during the pre-selling (ester) years, the equivalent of quick money, however the general market will have reached the point of no return by the time the property is ready for occupation.
The property agent involved in the off-plan property rental will always negotiate on the purchaser’s behalf to ensure that the property will be inhabited and the rental return made during the pre-selling (ester) years. Property rental agents are therefore specialists in off-plan property investment, the rental returns during the pre-selling (ester) years and the rental return on purchaser’s occupation.
Off-plan property investments may be ideally suited to those looking for the short term benefits of long term rental and the capital appreciation during the renting period, however during the next three years, the returns will be based on selling the property rather than renting, which will almost always lead to a loss on the part of the investor.
Off-plan investment can be made directly by either immediate sale of the property, exchanging preferred shares, or by pooling mortgage funds, however many may do a combination of all three depending on how many properties they have in each investment vehicle. This is effectively the successful property investment marketplace and market.
Investors seeking a long term return on investment will benefit any property rental agent by the rental returns usually achieved on sales of properties, however investor has to be mentally prepared to hold the investment for 3 years once the property is turned over to the agent, the property agent will ensure that the property will be occupied by tenants for that pre-generated period and also ensure that there will be in place the basic knowledge of the local market, being aware that local Estate agents or letting agents will be offering lease occupancy places to tenants when the property is turned over to the agent.
Property Investment Buyers in the USA need to be aware of the risks of mortgage backed securities which are household names within the States, the UK as a whole and also the meaning of a Mortgage Backed Security in America. It means that there is a mortgage secured against a property that the financial institutions involved will sell on the back for a lump sum and a stream of income for themselves. It is important that property investor has their own finance expert to deal with such investments to ensure the risk is removed from their investment.
Property rental in London is by no means simple and requires a careful eye. Obviously, it is very easy to rent out properties that are ready to occupy, then the property investor will be able to pay their own bills and as the property rental income continues increasing the value or equity of the property just increases.
Property investors should research the area and try to look for a property that is just off the beaten track. Areas where there may be more restaurants and shops may be convenient for the property investor, who is looking to generate a higher rental return, but comes with more inconveniences. On the other hand, if it were a well located area in respect to an area popular with the opposite then the rental income for the property may be easier to achieve.
Property investors capable of purchasing in highly desirable areas could find that the rental returns are extremely high due to demand outstripping supply, and could tap into the availability of cheap mortgages by allowing the rental property to be let out for the mortgage free period.
Examples of successful property rental investments are listed below:
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