Despite last year’s uncertainty following the Brexit vote and stamp duty changes, London’s property market continues to show strong returns on investments for landlords in the capital, as gross yields and capital appreciation remain positive.
This is according to findings from the Foxtons London Lettings Report for Quarter 4 2016, our second quarterly report focusing on the capital’s rental market.
While you can read the full report here, we’ve highlighted some of the key findings below.
Increased stock levels has affected average rental price
As was the case in Q3 2016, the findings from the Q4 report show that average rents have been impacted by rising levels of available rental stock across London.
Studio flats in zones 1 and 2 have been least affected by the unrest in the rental market in 2016, with annual change at -0.5% and -1.5% respectively.
And while the average annual rent per square foot is down for all property types across the capital from Q3 to Q4 2016, the price for one bedroom properties has remained the same.
Number of tenants looking to rent in Zone 2 has increased
Q4 of 2016 saw a marked increase in the number of tenants searching for a rental property in Zone 2, up to 44% from 35% in Q3 2015.
This heightened demand is reflected in the fact that, when compared to Zone 1 and Zones 3-6, average weekly rents have fallen the least in Zone 2 from Q4 2015 to Q4 2016.
London property offers stable long-term investment
Property yields in London remain strong in Q4 2016 and this is unlikely to change any time soon, even though there may be instability in the short-term.
Gross yields are positive across all zones and property types in the capital. But the best yields can be found in properties in Zones 3-6 across all property types – with highest yields from studio flats, at an average of 5.2% per square foot per annum.
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