Black Brick has seen ‘an influx of enquiries from investors looking to take advantage of the improving investment market.’
“Buy to let investments have been a hard sell in recent years,” says Camilla Dell of buying agency Black Brick, “but over the past couple of years the goal posts have moved.”
Prime Central London’s remaining landlords are enjoying higher yields as rents climb while property values fall – twin trends driven in part by a sustained exit of investors over the last decade.
With rental yields now coming in at 4-6%, investors are once again eyeing PCL assets. Black Brick says it is seeing more enquiries from investors “who can see that it is starting to make sense.”
The agency is currently bidding on a one-bedroom apartment in W1 for an investment client, which has a gross yield of 5.85%, and has its eye on an apartment building in Kensington that is heading to auction offering yields of 4.59%.
Camilla Dell, Managing Partner at Black Brick: “Buy to let investments have been a hard sell in recent years, with increases in Stamp Duty and an end to mortgage interest relief making it challenging for landlords to turn a profit and the incoming Renters Rights Bill making it harder for landlords to evict tenants when they please.
“And, since Black Brick was founded in 2007, high entry costs and buying costs mean that yields in PCL have been unappealingly low at two to three per cent.
“But over the past couple of years the goal posts have moved. Prices have fallen and rents have risen – ironically in part because many dissatisfied landlords have exited the sector over the past decade reducing stock levels.
“As a result Black Brick is now seeing yields of four to six per cent. We are also starting to see enquiries from investors – in one case an investor from Asia looking to invest up to £120m in London – who can see that it is starting to make sense.
“While capital growth, in the short and medium term, is unlikely to be significant, rents are set to increase by 21.1 per cent between now and 2029, according to Knight Frank.
“Meanwhile, and for the same reasons, long-term London residents who have always rented are now calculating whether it might make better financial sense for them to buy if they intend to remain in London.”
Tom Kain, Partner at Black Brick: “We have received an influx of enquiries from investors looking to take advantage of the improving investment market. These are both clients looking at individual units, and block buyers, with buildings containing six or more apartments under one roof. Typically, they are looking to diversify their wealth, and central London property is still viewed as a stable asset to own.”
