London has recorded a sharp increase in buy-to-let investors over the past two years, according to a leading estate agency in the city, who added that in the first quarter of 2014, 26.2 per cent of its buyers in Chelsea were purchasing property for investment, compared with just 2.3 per cent of buyers in Q2 2012.
“The rental landscape in prime central London is fast changing,” said Zoe Rose, Head of London Lettings at Strutt & Parker. “Investors are no longer fixed on chasing high rental yields and are happy to invest for the capital growth alone. Consequently, investors are incorporating larger family accommodation into their portfolios, resulting in more family houses coming to the market.”
According to Strutt & Parker, their tenants in London rent on average for 29.8 months, far longer than the national average of 20 months (according to ARLA), with the majority in London in their 20s and 30s.
The ultra high-end sector of the ‘trophy’ prime central lettings market is also active – examples include a 10,000-sq-ft penthouse in Knightsbridge and a nine-bedroom newly refurbished property in Rose Square in Chelsea, both currently available for £25,000 per week.
This sector of the market is increasingly fast-paced with the most coveted rental properties going to sealed bids and even being let without ‘physical’ viewings – mirroring the buoyant sales market in London.
Seventy per cent of Strutt & Parker’s landlord base is British, whereas 75 per cent of its tenants are international – often from France, Italy and Spain – which is driving some interesting changes in the marketplace.
“Renting is the norm in prime European cities like Paris, Milan and Barcelona,” added Ms Rose. “And the influx of young and affluent international tenants flowing into London is driving up standards in the capital as their expectations of rental property are very high. We describe this tribe as the ‘GloMads’, Global Nomads who are open to travelling from place to place over longer periods of time, often for employment.”