Investing in London: is it a good deal ?

Buying for rent might be less interesting than before. Nevertheless, investing in the British capital still offers many advantages. London will always remain London, an attractive and safe city for investors. Uncertainty related to Europe’s exit and negotiations will certainly slow down the development of new programs, resulting in a reduction in the supply of available products and thus increasing the already abysmal deficit of housing with possibly future price increases. .

The evidence, Savills, a key real estate player on the spot, known for its cautious forecasts, predicts a growth of 5% within four years.

It is also interesting to note that, despite the “negative” reforms taken in a pre-Brexit context of the real estate market that was considered too dynamic, despite the uncertainties associated with Brexit, London real estate prices have not collapsed. At worst, they decreased slightly, up to a high of 10% in some neighborhoods (compared with an average value increase of 10% per year for 20 years). They may therefore recover faster than expected (if, as the latest figures in the economy seem to confirm at the time of writing this article, economic indicators are good) and that the period is so conducive to doing great business. Would we be in a market through?

With the weakness of the pound, it could also be a good time to buy for those with savings in euros or dollars. It can be very interesting for those who own a property or apartment in France or elsewhere, to borrow with this property as collateral to get out of cash to invest in London. This has the dual benefit of benefiting from a very interesting exchange rate at this time (1.10% instead of 1.45% in March 2016) and long-term fixed interest rates in France (15 to 25 years) instead of two to five years maximum in the UK.

It is also important to note that many Londoners, owners of their main home, invest in small apartments in Buy to let to bequeath to their children later. Often they do it without any input. Their home has grown in value, averaging 10% a year over the past 20 years. This serves as a guarantee. And at the time of “remortgage” (operation that consists of buying back its loan with another fixed rate loan every two, three or five years), they take the opportunity to increase the amount borrowed to release a contribution for their rental investment, the rest of the investment being financed by a “buy to let mortgage” (loan) repaid by the rents.

Which neighborhood to invest in and which type of property to choose?

The basic rule is to choose the location of the property, besides; here are the best areas of London. We recommend our customers to choose a neighborhood and a property in which they themselves would live, close to transport, of course. The well-placed apartments with one or two bedrooms are easily rented in London. Bright, out of base, less than 10 minutes from a metro … we cannot go wrong! Three categories of goods do the trick:

  • For the heart stroke, the buildings “Period”.

These typical houses, often in red brick, are home to cozy and comfortable apartments, with all the charm of the old. West Hampstead, Kentish Town, Tufnell Park, Belsize Park are popular neighborhoods, as close to French colleges and high schools. Be careful, there is often some refreshment or maintenance work to be done.

  • For performance, the “Purpose-Built”

These buildings often date from the years 1980-1990. They are not necessarily very aesthetic from the outside, but against very functional and with large volumes. They cost less to buy, the charges are reasonable and it is the solution that guarantees the best returns.

  • For tranquility, the new!

Investors choose the new one to be quiet (no work). But beware, the entrance ticket usually costs 20% more than the old for the same area, and the charges are more important: janitor, gardener, and residence services … (often in the range of £ 3,000 at £ 4,000 a year for a small apartment).

More than the return, we must also look at the value of real estate in the medium term, just to make a nice gain in resale. For those who favor capital appreciation, we recommend investing in rapidly changing neighborhoods. Look at Shoreditch, Bethnal Green, Mile End, Bow or Willesden Green. Still accessible neighborhoods that are transforming and will grow in the years to come, just like Highbury and Wembley.

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