The potential of buy-to-let in London

May 3, 2023

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London property investment

Article Summary

London
  • Despite economic uncertainty in other areas, the London rental market has remained strong, with consistent demand for rental properties making buy-to-let investments a popular choice.

  • According to recent research by the property investment platform, Bricklane, the top postcodes for buy-to-let rental yields in London in 2023 are in the N18 postcode, offering a 6.72% yield.

  • One of the key changes introduced in the budget was the extension of the stamp duty holiday, which will now run until the end of September 2023.

As we enter 2023, the London property market continues to present a compelling opportunity for property investors seeking to build their investment portfolio. Despite economic uncertainty in other areas, the London rental market has remained strong, with high rental yields and consistent demand for rental properties making buy-to-let investments a popular choice for investors seeking to maximize their returns on investment.

As one of the UK’s leading property investment agencies, we have a deep understanding of the London property market, and we believe that investing in buy-to-let properties in the capital presents a compelling opportunity for those seeking to grow their portfolio. In this article, we will explore the key factors that make London a favourable market for property investment in 2023, including high rental yields, supply vs demand, and the effect of the 2023 Spring Budget.

 

High Rental Yields

One of the key advantages of investing in buy-to-let properties in London is the potential for high rental yields. Despite the ongoing economic uncertainty, the London rental market has remained strong, with many postcodes still offering rental yields above the national average.

According to recent research by the property investment platform, Bricklane, the top postcodes for buy-to-let rental yields in London in 2023 are located in the North and East of the city, with the N18 postcode offering an impressive 6.72% yield. This high yield potential is driven by the consistent demand for rental properties in the city, coupled with a limited supply of available housing.

 

Supply vs Demand

The limited supply of rental properties in London is due to several factors. Firstly, the high cost of property ownership in the city makes it difficult for developers to build new housing stock. Additionally, strict planning regulations and a lack of available land make it challenging to increase the supply of available housing. This limited supply, coupled with a consistently high demand, makes London a particularly attractive market for property investors seeking to generate high rental yields.

Despite the challenges facing developers, the London property market is set to see an increase in new housing stock in the coming years, with several large-scale development projects set to be completed in 2023. This increased supply could potentially have an impact on rental yields, although it is likely that demand for rental properties will continue to outstrip supply in the short to medium term.

Effect of the 2023 Spring Budget

The 2023 Spring Budget announced by the government has made London property investment even more attractive for investors. One of the key changes introduced in the budget was the extension of the stamp duty holiday, which will now run until the end of September 2023. This holiday exempts buyers from paying stamp duty on properties valued at up to £500,000, making it easier for investors to enter the market.

The government also announced changes to capital gains tax, which will make it more expensive for investors to sell their properties in the future. However, these changes are unlikely to have an immediate impact on the London property market, and it is likely that investors will continue to see healthy returns on investment in the short to medium term.

Of course, as with any investment, there are also risks to consider when investing in London property. One of the main risks is the potential for a market downturn or a decrease in demand for rental properties. However, with the consistent demand for rental properties in London, this risk is relatively low compared to other property markets.

 

Conclusion

In conclusion, the London property market presents a compelling opportunity for property investors seeking to build their investment portfolio in 2023. With high rental yields, the increasing gulf between supply and demand of properties, the 2023 Spring Budget changes and the ever-growing population in London, the city is the prime location to invest in.

To learn about the property investment opportunities above, or to find out more about how property investment works, get in touch with the experts at North Property Group today.

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