A recent research report by estate agents Countrywide suggests that renters are abandoning London at the greatest rate since 2007. However, unlike the exodus of 10 years ago they are not moving outside of the capital to buy their own property. House price inflation across the South-East means that this time around most of those opting for the commuter lifestyle in a bid to reduce living expenses, London rents have risen more than anywhere else since 2012, will still be renting in their new locations. While 51% of renters leaving the capital in 2007 did so to move into their own home, that has dropped to only 21% ten years later.
With house prices in the capital forecast to dip over the next 2-3 years, buy-to-let landlords with investment properties in the capital may well be wondering if it doesn’t make sense to cash in now and follow the renters. A report in The Telegraph newspaper today looks at where the London renters beating an orderly retreat are choosing to set up camp. The mini-migration pattern highlighted will provide a useful insight for those buy-to-let landlords reviewing London property holdings as well as anyone considering a first investment property.
The same article states that many southern-based landlords have been looking north for better returns but with most of those exiting London remaining in the South East there may well be good opportunities closer to home. So, where are they going?
The 10 most likely destinations for renters choosing to relocate outside of London are listed as: Slough, Thurrock, Broxbourne, St. Albans, Canterbury, Elmbridge, Oxford, Basildon, South Oxfordshire and Luton. Interestingly, 2 of these destinations, Luton and Canterbury, also match the top 10 buy-to-let postcodes in the UK, as ranked in the most recent edition of specialist mortgage lender LendInvest’s bi-annual buy-to-let index.
The index says rental price growth over the year to June was 7.37% and 6.62% in Luton and Canterbury respectively. Capital gains on Luton properties were an average of 12.83% over the same period and 9.34% in Canterbury. That compares to negative rental growth in most areas in London and capital gains of between 1% and 4%. Other towns in the South East that make the country’s top 10 postcodes for buy-to-let include Romford, Stevenage, Rochester, Colchester, Dartford, Southend-on-Sea. In fact, of the top 10, only Manchester and Peterborough are not in the South East, belying much of the recent press coverage of more northern buy-to-let returns as currently representing the best available.
With London prices, closely followed by those in the South East, also forecast to bounce back to the fastest growing in the UK within three years, London commuter towns may well currently be the best bet for investment properties, rather than the much trumpeted prospects to the north.