As the new Mayor of London, Sadiq Khan, is focusing on tackling the shortage of housing in the capital, now is a great time to get a slice of the action.
With two million private tenants currently residing in London, demand for good quality homes from good landlords is set to remain strong.
London estate agent Portico has put together a list of eight buy-to-let hotspots that should deliver both high rental yields and strong capital growth in the future.
Although Crossrail – the new high frequency railway from London to the South East – isn’t set to launch until 2018, the east-west line is already forming property hotspots along its route. Portico expects property prices to have risen by at least 15-20% in Acton by the time the Elizabeth Line is complete.
Additionally, the nearby Old Oak Common is due to become a hub for Crossrail and High Speed 2. With the regeneration project likely to have a positive impact on the surrounding areas, Acton’s popularity with renters is set to surge.
- King’s Cross
Following recent large investment projects in the land just north of the station, King’s Cross is fast becoming a new hotspot for commercial and cultural activity.
The Bloomsbury Senior Sales Consultant at Portico, Lucy Adamson, looks at values in the area: “Property prices are starting to reflect the area’s growing popularity, and the new luxury flats in the recently completed Plimsoll Building are selling upwards of £1,400 per square foot, which is a record high for the area. This is starting to have a positive ripple effect on the surrounding areas as a whole in all directions: north towards Caledonian Road, east towards Angel, and south towards Bloomsbury.
“There are still many opportunities to invest with a view to solid capital growth during the next five to ten years, as further exciting projects are completed, including Google’s headquarters, the large Francis Crick Institute medical research centre, and various other head offices for well-known brands, such as New Look.”
She adds: “I also anticipate that the demand from professional tenants for high quality housing in the local area will sky rocket as a result of the new jobs generated. All of this will add to the existing fact that King’s Cross is in a fantastic central location with one of the best stations for access to multiple transport links across all of London, a connection to mainland Europe in only a few hours via the Eurostar, and all within walking distance of the West End.”
- Elephant and Castle
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Traditionally not the most appealing place to live, things are now changing in Elephant and Castle. Currently going through a £3 billion redevelopment, the landscape in the area is set to be transformed. Both the Heygate council estate and outdated shopping centre will be demolished to make way for 1,200 new houses and around 2,500 new apartments and shops. The regeneration will also involve a new pedestrianised town centre, market square, an integrated public transport hub and new green spaces.
Portico’s Dulwich Sales Manager, Tony Chryseliou, expects property and rent prices to slowly rise in the area: “Elephant and Castle is definitely an up-and-coming hotspot. Several new luxury developments are being constructed as part of the large-scale regeneration project, which are attracting a younger, more affluent demographic to the area.
“It’s also on the cusp of zone 1 and has excellent transport links to the Square Mile, so it’s better to buy now while prices are relatively affordable.”
It’s good news for Battersea – the area is getting the Tube! The Northern Line is set to be extended to Battersea, with two new stations at Nine Elms – London’s biggest regeneration zone – and Battersea Power Station by 2020. The long-term plan is to extend the Northern Line even further to Clapham Junction, which will likely push up prices in the area even further.
Luke Parle, the Battersea Sales Manager at Portico, comments: “Nine Elms and the new build market in Battersea has taken a bit of a hit recently, possibly as a result of an influx of new builds being offered to the market in one go. This is, however, having a positive outcome for pre-owned homes, specifically anything that is older than 50 years. People who can’t afford new build stock are buying up the older stock in anticipation of long-term capital growth in the area once the new build projects have been finished (circa 2020).”
Although Nine Elms has been hit recently, Oval and Stockwell have really benefitted from being close to the redevelopment zone. Transport links in both areas are great; the only thing that has previous held both spots back is the lack of amenities. However, both have seen a flood of fashionable new cafes, shops and bars open up recently.
Homebuyers are flocking to Streatham, which is much more affordable than nearby Clapham and Balham, and has excellent transport links to London Victoria and a range of good schools.
Over the last 12 months, house prices have risen by 10%, with Portico forecasting a further 5% increase over the second half of the year.
Streatham Hill is also fast becoming the buy-to-let capital of south London, with average rental yields of 4.4%.
The Managing Director of Portico, Robert Nichols, says: “Landlords are now looking at Streatham Hill for a strong return – an area gaining the nickname the Clapham Overflow. Although the area is still cheaper than Clapham, the price divide is getting smaller and we are seeing a large number of renters move into the SW2 area because Clapham has become unaffordable for some.”
Brixton became popular as a cheaper alternative to neighbouring Clapham, but now buyers and tenants are moving here because they love it. Not only is it more affordable, but it’s also in zone 2 at the end of the Victoria Line. Brixton is one of the most gentrified spots in London, filled with modern eateries, bars and boutiques. However, locals can still enjoy the cultural treats found within its famous market. The average price of a one-bedroom home here is now around £400,000, with prices set to rise by a further 5% this year – so get in quick!
While Archway is still a lot cheaper than its north London neighbours, the Camden Sales Manager at Portico, Stephanie Powell, expects prices to increase by at least 5% this year.
Last month, Transport for London (TfL) began work transforming Archway by removing the much hated one-way system in the area, and replacing it with two-way traffic lanes, improved pedestrian crossings and a new central piazza. Work is due for completion by 2017.
- Tottenham Hale
Despite having a bit of a rough reputation, Tottenham Hale is becoming a first time buyer hotspot. But there will always be those who cannot afford to buy and must rent instead.
It is still a fairly cheap area to buy and rent – a one-bed property would cost around £300,000 or £1,400 per month. Plus, you can get to the City of London in less than 15 minutes on the Tube and regeneration is starting to smarten up the area.
Tottenham Hale is also undergoing a transport revival, with £110m being spent on a new Tube, rail and bus station, road network improvements and public realm works, which will be completed by 2017. It may also receive a Crossrail 2 station, which would push prices up by a further 10%. Now is definitely a good time to buy!
If you do decide to become a London landlord, make sure you remember to stick to the law and avoid being put on Sadiq Khan’s new rogue landlord database!