Well, as the spring begins I
remembered that a few days ago, I got chatting with one of my out of town
landlords who was back in Hampstead visiting his family. Brought up in Hampstead, he went to the Hampstead
School for Boys back in the 1970’s and is now a University Lecturer in central
London. To enhance his retirement, he
has a small portfolio of four properties in the suburb and wanted my advice on
where to buy the next property in Hampstead (as he lives in a college owned
flat and anyway, would never dream of buying where he lives in Kensington (where
the average value of a flat is £1.62m and a house £4.1m. Eye-watering to say the least!!).
Before I could advise him, I reminded
him that the most important thing when considering investing in property is
finding one with decent rental yields for income returns, yet at the same time,
it must have the potential for capital growth from rising house prices over
time. Going into 2017, Hampstead landlords
will be under more pressure to find the best permutation of yields and capital
growth, as extra stamp duty charges for buying properties and a squeeze on
mortgage interest relief will raise their costs.
However, (you knew there would be
a however) before we look at yield and capital growth, one important
consideration that often many landlords tend to overlook, is the propensity of
how likely the rent will increase. Interestingly,
the average rent of a Hampstead property currently stands at £3,398 per month,
which is a fall of 7.5% compared to twelve months ago (although it must be
noted this fall in rents is for new tenancies and not existing tenants). See the graph below that illustrates this trend - (Source ONS ~ Office of National Statistics)
Anyway, back
to yield and capital growth, the average value of an average Hampstead property
currently stands £1,541,700 meaning the average yield stands at 2.2 % per
annum, which on the face of it, many landlords would find disappointing. That
is the problem with averages, so if I were to look at say just apartments
in Hampstead which are the sort of properties a lot of landlords buy,
in Hampstead over the last 12 months, according to the Land Registry,
the average value achieved for all of the apartments in the area is £885,000
whilst the average rent for all apartments is £3,326 per month
(remembering these are still averages), giving an average yield of 3.75 %.
However, if that wasn’t high enough, there are landlords
in Hampstead who own some specialist properties that are achieving
even higher than that (e.g. Student or Houses under Multiple Occupancy) –
again it comes down to your attitude to risk and reward (give me a tinkle if
you wanted a chat about those sorts of properties – although they can be fun
and games!)
Ultimately investors want to be
making gains from both rent and house price growth. When
combined, the rental yield and capital growth gives you the return on
investment, and that is what I told our University friend from Kensington. Return
on investment is everything. So, looking at property values in Hampstead have risen in the last year by
4.2% …. Which means the current annual return on investment in Hampstead for a typical
apartment is 7.95 % a year.... not bad.
Whether you are a soon to be new
landlord or existing seasoned landlord in Hampstead, you might be interested in
a blog about the Hampstead Property market, where you will find similar
articles to this one about what is happening in the Hampstead Property market
.... The web address is www.nw3propertyblog.com
.... and to answer the question on what
he should buy, well on the same blog, once or twice a week, I post what I
consider to be the best buy to let deals in Hampstead, irrespective of which
agent it is being marketed with.
How Much Is Your Property Worth? Click Here To Find Out For FREE
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.
Don't forget to visit the links below to view back dated deals and Hampstead Property News.
No comments:
Post a Comment