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Buy-to-let trend tips offered

The London estate agent company ludlowthompson.com offers five 'trends' to help buy-to-let investors stay ahead of the market.

The first of the estate agent's tips concerns the size of the property you take on. As household size decreases, rent from one bedroom flats outperform the market. Rents on one bedroom flats have outperformed the rest of the market over the last few years.

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Stephen Ludlow, director at ludlowthompson.com, said: “People are now marrying and having children later, so there are increasingly more individuals living on their own.”

“Younger people are putting off their first purchase for longer, but want to live independently or with a partner, and so try to avoid flat sharing, increasing the rental value of smaller properties.”

Density of homes is on the increase

A sudden and sustained increase in the density of homes means that space is becoming an increasingly rare commodity. The average density per hectare of new homes is now up to 40%, compared to just 24% 10 years ago. ludlowthompson.com reminds it is important to consider this when thinking about a buy-to-let property as properties with extra features, such as gardens, parking spaces or storage space in a loft or cellar are more desirable for potential renters.

Look for supply shortages

Purchasing buy-to-let properties in areas where there is a shortage in the supply of houses will safeguard against potential lulls in demand. In London last year 23,866 houses were built, which was only 68% of the Greater London Housing Authority's target of 35,350, indicating that demand for rented accommodation will continue to be strong.

Across the UK as a whole, 154,457 houses were built, exceeding the target of 150,000. ludlowthompson.com advises potential investors to check whether they are buying in an area where demand outstrips supply or vice-versa.

Older properties continue to outperform new-build properties

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The value of old stock has consistently outperformed new build properties over the last three years. Stephen Ludlow commented: “Period properties are more in demand than new developments, so potential investors ought to consider this if they are looking to obtain capital gains from their investments as well as rental returns.”

“Investors should look for older properties that come with a proven track record as a rental product. Past performance should be considered when deciding how much rent can be achieved.”

“New build flats are often in blocks with other identical flats. This can lead to landlords having to compete with each other by lowering rents in order to fill the property. The scarcity value of owning a single unit can add to potential returns.”

Where graduates locate for their first job

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London represents 12.4% of the total population of the country, but 17.6% of all graduates move to London in the year after they graduate. ludlowthompson.com advises that buy-to-let investors should be aware of where graduates are going to relocate when considering what type of property to purchase. The average graduate starting salary is set to be over £23,000 this year, and a substantial proportion of renters are young professionals.