Do Londoners see buy-to-let as a good investment?

Our recent survey about whether people feel buy-to-let is still a good investment was discussed in one of our previous blogs. It attracted plenty of attention, so as we have a substantial presence in London, with offices in Mayfair and Threadneedle Street, we decided we’d go into greater detail with regard to how Londoners saw the issue. Here are our results:

Do you consider investing in a buy-to-let property a good investment?

The survey covered the whole of the UK and, perhaps surprisingly considering the cost of London residential property, Londoners were the most positive about the possibilities of buy-to-let as an investment. 82% thought it would be a good investment, possibly due to the fact that residential property prices have stalled or fallen in London over the last four years. 

In addition, there is a high proportion of younger people in London who are finding it extremely difficult to get a foot on the property ladder, so they may regard a buy-to-let property as a way to achieve eventual home ownership.

If you were to invest in a property to rent out, which type of property are you most likely to consider?

As might be expected, the most likely type of property a Londoner would consider for a rental investment would be a flat or apartment, with 46% of respondents picking this option, a higher number than any other region with only Scotland coming close. 30% would choose a two-bedroom house and 17% a house with three bedrooms or more. However, only 4% would choose a one-bedroom house, probably reflecting the better value for money which a flat or apartment would achieve. 

What would most likely put you off investing in a buy-to-let property?

38% of cost-conscious Londoners cite their main concern as increased tax and stamp duty rates, with 33% more worried about Brexit uncertainty, 15% fearing that there wouldn’t be enough return on investment from a rental property, and 14% stating that difficulties obtaining a mortgage would probably be an issue. There’s no doubt that stamp duty is a major issue, as although it is zero for properties under £125,000 (for those who do not own any other property), a prospective purchaser is unlikely to find anything in this price bracket in London.

What is most likely to encourage you to purchase a buy-to-let property?

Following on from the previous question, the largest factor influencing Londoners in a decision to buy a rental property would be a reduction in stamp duty and other relevant taxes, with 43% of respondents citing this as their biggest encouragement, a higher proportion than anywhere else in the country. 30% mentioned a better choice of mortgage products as being an inducement, with 26% more likely to consider an alternative to the traditional rental market such as Airbnb.

Which is the most likely reason you would invest in a buy-to-let property?

45% of Londoners thought a buy-to-let property could be utilised as a pension, which is fewer than respondents in all other areas of the country other than Northern Ireland, which could be explained again by the higher proportion of younger people concentrated in the London area. 32% would like to use buy-to-let income as a replacement for their current income, while just 24% saw it as an inheritance for their family.

Looking at these figures, it’s perhaps surprising that the ideal of buy-to-let as an investment is alive and well in the capital, but there’s no doubt that it still appears to be something to aspire to, whether as a means of getting a foot on the property ladder or part of a portfolio income.

Property investment finance is a very complex area and anyone thinking of dipping their toe into the complicated waters of buy-to-let property would benefit from professional guidance on tax, liabilities, asset protection and other essential issues. Here at Perrys, our experienced property accountants can give you all the advice you need, tailored to your specific requirements. Find out more about our property work here or get in touch to see how we can help maximise the return on your investment.