The hike in demand for houses and apartments to rent in central London has sparked a flurry of activity among investors looking to capitalise on the booming rental market by purchasing residential properties in the capital with a view to letting them out.
Fresh figures from the Council of Mortgage Lenders (CML) reveal that gross mortgage lending of £4.2 billion across 33,500 mortgages was advanced to buy-to-let landlords in the first quarter of 2013, up from £3.7 billion in the same quarter of last year.
Nearly half of this lending was for remortgage, rather than house purchase, which suggests that many existing landlords are seeking to add to their buy-to-let portfolios.
Paul Smee, Director General of the CML, commented: "The buy-to-let mortgage market is performing well, against a backdrop of robust landlord - and tenant - demand for good quality rental property. Loan performance compares favourably with the owner-occupier sector, and buy-to-let continues to grow as a proportion of the overall mortgage market."
Buy-to-let lending accounted for 13.4 per cent of total outstanding mortgage lending in the UK at the end of March - up from 13 per cent the previous quarter and 12.9 per cent at the end of the first quarter of 2012.
According to EA Shaw estate agency, a lot of this money is finding its way into the housing market in prime parts of the capital, reflected by a rise in the number of investors actively searching for houses and apartments for sale in central London.
Lisa Hollands, Managing Director of EA Shaw, said: "Reassured by the stability of the market, British buyers are now cherry-picking the best of London's prime property, targeting high value, exclusive homes. They are attracted to the 'collectors' items' – unique properties in the Capital in rare and sought after addresses.
In addition to a rise in the number of British people looking for apartments and houses for sale in central London, Knight Frank reports that more foreign investors are also taking a greater interest in London, particularly purchasers from Asia who are buying up property in central London and then putting it into use in the rental market.
Analysts at the company say that demand will overtake supply in a matter of a few years, which is likely to trigger more interest and higher prices in the rental market as more first-time buyers are squeezed out of the home market and into the rental sector.
Knight Frank's London Development Report states: 'Investors have typically been more interested in a central location than an extra percentage point or two in annual yield. There is also potential for more capital growth, coming on the back of a 53 per cent rise in prices since the market trough in 2009'.
Leading estate agents Sandfords also believe that prime central London offers greater room for capital growth.
"Prime central London property is largely immune from short term fluctuations," said Sandfords' Andrew Ellinas. "The main reason is that a property in London has intrinsic value that is not dependent on buyer sentiment but its use as a place to live and do business in the most vibrant and cosmopolitan city in the world."
Increasing demand for rented property has pushed up average rents in recent years. This coupled with strong capital growth, has resulted in enviable returns for those who own property in prime central London.
Knight Frank's London Development Report states: 'Investors have typically been more interested in a central location than an extra percentage point or two in annual yield. There is also potential for more capital growth, coming on the back of a 53 per cent rise in prices since the market trough in 2009'.
Leading estate agents Sandfords also believe that prime central London offers greater room for capital growth.
"Prime central London property is largely immune from short term fluctuations," said Sandfords' Andrew Ellinas. "The main reason is that a property in London has intrinsic value that is not dependent on buyer sentiment but its use as a place to live and do business in the most vibrant and cosmopolitan city in the world."
Increasing demand for rented property has pushed up average rents in recent years. This coupled with strong capital growth, has resulted in enviable returns for those who own property in prime central London.
No comments:
Post a Comment