London-based estate agents Portico compiled a list of places that it believes are emerging buy-to-let hot spots in the city and unsurprisingly, many of the areas identified are located in the outer London boroughs where rental returns are typically higher.
Below is Portico’s top 10 places to buy-to-let in London with potential yields:
1. Ilford - Current highest yield according to Portico: 5.5%
2. Hounslow - Yield: 5.3%
3. Greenford - Yield: 5.3%
4. Croydon - Yield: 5%
5. Wood Green - Yield: 5%
6. Whitechapel - Yield: 4.8% around Fenchurch Street station
7. Forest Gate - Yield: 4.8%
8. West Drayton - Yield: 4.8%
9. King’s Cross - Yield: 4.4%
10. Acton - Yield: 4.1%
Fredrik Sandvall, Head of Multi-Let London, commented: “Croydon is a buy-to-let hotspot because of its affordable property prices, compared with many other parts of London and its excellent transport links into the City. Croydon is undergoing a massive £5.25bn regeneration programme across East Croydon, West Croydon, Mid Croydon, Fairfield, and Old Town.
At the heart of these transformative plans will be a £1.5bn retail and leisure complex by Westfield/Hammerson, eight new hotels, more than 2m sq ft office space and 8,000 new homes. The first Boxpark outside Shoreditch, Boxpark Croydon is due to open in October, outside East Croydon station and will offer more than 40 food and drink outlets, alongside shared open spaces and regular events. With blue-chip employers, a thriving town centre and growing demand for rental accommodation, Croydon is already a great place to invest.
Croydon offers investors some of the best yields in London. A few specific Croydon areas even beat the number one on Portico’s London top yield list, with average yields in Purley 5.6%, Coulsdon 5.5% and West Wickham 5.4%. However, if landlords want to boost their yields, they don’t need to look outside Croydon.
A high quality HMO in the town will give an annual yield of between 8% and 15%. A three-bedroomed, single let property in Croydon may typically achieve a gross rent of £1,500 pcm for a family. If it is converted into an HMO, the gross rent on the same property could exceed £4,000 pcm. This represents a significant profit opportunity for buy-to-let investors, who have the required expertise to generate sustainable returns in this increasingly competitive market.
Many standard properties can be successfully converted to HMOs with the introduction of C4 building regulations. If a high quality refurbishment is undertaken, the property can attract working professionals in the right location, who are prepared to pay more for a shared property, with a superior finish. Luxury ensuites, large TVs, premium kitchen appliances and furnishings are the type of features that help to generate a high yielding HMO, where the market conditions accommodate.
We have just opened an office in Croydon to offer a full HMO portfolio management service for landlords in Croydon, Greenwich, and Lewisham. Multi-Let UK is the only national specialist multi-let portfolio management company that specialises in professional house shares and has built a reputation as the market leader in houses of multiple occupancy investment.”
