Is outer London becoming the preferable area for buy-to-let investors?

Is outer London becoming the preferable area for buy-to-let investors?

Investment in the buy-to-let sector in London has been becoming more and more popular in recent times, but until now it has been mostly focused around the centre of the capital, where most of the young professionals looking to rent property have been living. 

However, as fewer buyers come to the fore, and the number of people who actually own their own home seems to be on a perpetual decline, the demand for rentals is spreading. This positive factor has seen investors in the sector start to head further out, with commuter belt areas now becoming a strong target for putting money into buy-to-let. 

According to the latest study released by Fraser & Co in the capital, there are more people looking to invest further out because of the simple fact that the cheaper initial purchase price means landlords are able to get better returns on properties away from the centre of the city. 

The fact that areas further afield are starting to dominate the market, it added, can be evidenced by the fact the likes of Hackney and Southwark have seen prices rise four per cent year on year, while Chelsea, Knightstbridge and Kensington have witnessed stable prices in the same period. 

Another reason for a stronger buy-to-let market further out has been the fact that more domestic investors are now spending their money in the rental market than ever before. In London, more than in any other city in the UK, has been dominated by Asian investors for many years. 

However, the large increase in mortgages for buying to let has meant that more UK-based buyers are putting their funds into property rather than other asset classes that may have been more popular in the past, such as gold, shares and even savings accounts. 

Robert Fraser, the company's managing director, said that moving forward, this is a trend that is expected to grow even stronger. "As buy to let mortgages become more appealing, we expect to see domestic investors nipping at the heels of their international counterparts, allowing areas in zone 2 to continue to thrive and extend out towards zone 3," he concluded.