The website Homes & Property listed the best districts in London for buy-to-let investors in a January 2017 article, and has named Barking as the top area.
In the last 12 months, landlords have faced the extra costs of stamp duty rises and tax relief cuts. This may have put off many landlords increasing their property portfolio, especially in London where house prices are high and rent levels remain steady.
Ruth Bloomfield, writing on the website, concluded that there are still profitable buy-to-let opportunities available in London, provided landlords pick the right locations.
A two-bedroom flat in Barking sells on average for £272,000 and can earn around £15,000 a year, which gives a 5.6% yield.
Other places in the London region that landlords may wish to consider are Thamesmead and East Woolwich, where with an average property price of £263,000 and a rental value of £14,500, landlords can expect yields of about 5.5%. This area is followed by North Dagenham with yields of 5.4%, while Ilford and West Ham both have yields of 5.3%.
Yields do not equal profits, however. Estate agents Savills calculates that about 25% of rental income will be spent on expenses including management fees, taxes, and maintenance. The property also needs to be occupied throughout the year as empty periods obviously reduce the overall profit.
Commercial mortgages are available at low rates to finance buy-to-let property. The best rates are available for buyers who can afford to put down a large deposit of around 40%.
