AUTUMN REVIEW Inside London rental prices in detail · House Prices – In England and Wales, the respective figures were £237,721 in July 2017, up 5.2% from July 2016 (£225,895)

AUTUMN REVIEW–InsideLondon rental prices in detailMortgage trendsReturnsArrears & voids–Press & Editor [email protected]

Summary fromStephen Ludlow, Chairman

Rental values may be fluctuating, but a busy summer period for London highlights seasonal demand – whilst well-dressed properties generally outperform–The buy-to-let market has weathered many storms over the years – and investors have continued to view London as a buffer against those swings as the capital has consistently provided long-term returns based on strong market fundamentals. On the basis of the most recent data and our own insights here at ludlowthompson, the outlook remains largely bright. It’s true that average rents in the capital have fluctuated over the past few quarters. They are down by 3.4% on average over the year, but the last quarter has shown an upswing of 1.1% to an average rental value of £2,137 (pcm), as strong tenant demand has kept the market busy over the summer period.

With the party conference season now over, we also learned about what the main parties’ proposals are saying for the rental sector as a whole. Labour is again proposing rental caps, and the Tories are focusing on investment in affordable housing and socially rented housing. However, both parties should remember that the current rental market has delivered well for renters and landlords alike, with long term tenancies now a common place in the private sector providing vital stability and security coupled with investment returns - so surely too much tinkering would be counter-productive? The OECD* has consistently supported the removal of obstacles to expansion of the private rental market to improve labour mobility and thus lower long-term unemployment. It also encourages governments to promote policies designed to increase supply, not potentially harm economic growth with caps.

Looking at the wider picture, as the population continues to grow, our day-to-day experience is that London continues to be a magnet for talent, as students, new graduates and professionals are drawn to the capital for the variety of opportunities it continues to offer – and many commentators agree. Indeed, the latest stats reveal that 110,000 new jobs have been created in just east London alone since the Olympics in 2012, with a further 125,000 predicted over the next decade – five times larger than initially expected.**

* OECD Economic Policy Reforms – Going for Growth Interim Report 2014 ** Evening Standard, 9 October 2017

02 / 08BTL SEASON REVIEW

EASTLONDON’SEMPLOYMENTGROWTH*PREDICTED NEW JOBS OVER NEXT DECADE

110,000–2012 – 2017

125,000*–2018 – 2028


For instance, a recent article in the Financial Times points out that while applications to UK universities from EU students has fallen by 5% in the year following the Brexit vote, this doesn’t appear to be the case in London with Imperial College, one of London’s top universities reporting that EU applicant numbers have actually risen by 5%.***

Recent data from City AM also shows that on-line applications from Europeans still make up a substantial proportion of prospective renters in London.**** In addition, a recent study reported by DMG Media suggests that migration from non-EU countries is likely to remain at around 155,000 a year at least until 2021.***** Sterling’s weakness may well be a factor making the UK seem relatively good value, but it’s London’s vibrancy – in so many different ways – that makes it really stand out as an attractive live/work location for UK and foreign nationals alike.

Local infrastructure in London is also another key selling point for renters. Areas with good transport links are in especially high demand and in many areas, those links are improving via innovations like the Night Tube or the advent of cycle superhighways. This tends to have a wider positive knock-on effect on local business creation and investment, creating a virtuous circle of regeneration -and location appeal - across the capital. As a result, landlords should remember to highlight new transport links when seeking to attract tenants. An important thing to remember is that potential tenants are ultimately looking for high quality accommodation. By that I don’t mean they are targeting prime properties filled with expensive gadgets and views over the River Thames, I simply mean that well-presented or recently refurbished properties are likely to be in greater demand and command the best rents.

In a more competitive market, regular, inexpensive property improvements such as a lick of paint or some new soft furnishings could make all the difference to staying ahead of the competition and securing rental growth. Indeed, whilst tax reliefs have been cut in terms of depreciation they remain available in terms of specific repairs and improvements thereby incentivising enhancements that in turn drive rents and returns.

Ultimately, time and time again we have seen that long-term returns for landlords show consistent growth. Our veteran buy-to-let Landlords have seen annual total returns of 10% per annum since 2000, which is extremely competitive when compared to other asset classes. This exchange of arguments reinforces the idea that, over the medium to long-term at least, London buy-to-let remains an attractive asset class. Indeed, buy-to-let consistently produces yields of 3.5% to 4% - outstripping inflation (currently at 3%) – and outperforms other assets on a risk adjusted return basis over 16 years. To conclude, despite short-term price variances, underlying demand is likely to remain robust.

*** Financial Times, 2 October 2017 **** City AM, 12 October 2017 ***** Daily Mail, 23 August 2017

ASSET APPRECIATIONVERSUSINFLATION

3%–CURRENT INFLATION

5.5%–TOTAL RETURNS


Key Trends for Q3 2017–The traditional summer peak helped overall rents increase slightly from the previous quarter, although we must caution that rents year-on-year have cooled and may continue to do so as we enter the winter period. However, buy-to-let landlords should remain positive as we have seen from recent statistics Europeans, along of course with individuals located in the rest of the UK, are continuing to come to London in large numbers.

Landlords will have seen, though, that the Bank of England recently raised interest rates from their record low of 0.25% to 0.50% on 1 November. What does this mean for landlords? That if you are a mortgage holder or looking for a new one, it makes good sense to lock in at a current low rate for a few more years if possible. If you are interested in getting a new mortgage, please contact Chris Lockley at Jigsaw Mortgages at www.jigsawmortgagesltd.com.

House Prices–In England and Wales, the respective figures were £237,721 in July 2017, up 5.2% from July 2016 (£225,895).Average London house prices were £488,729 in July 2017, up 2.8% year on year from July 2016 (£475,530).

Voids–In Q3 2017, void periods for ludlowthompson managed properties increased to an average 9 days, up from 5 days in Q2 2017.

Capital Growth–The annual rate of capital growth in London was 1.03% in July 2017.Source Land Registry

TENANT PROFILE–THE TOP FIVE EUROPEAN COUNTRIES WE RECEIVE RENTAL ENQUIRIES FROM– FRANCE 23%ITALY 15%SPAIN 13%IRELAND 11% GERMANY 10%

£225

,895

ENGL

AND &

WAL

ES

£237

,721

ENGL

AND &

WAL

ES

£475

,530

LOND

ON

£488

,729

LOND

ON

AVERAGE HOUSE PRICES–ENGLAND & WALESVERSUS LONDON2016-17

JULY 2016 JULY 20175.2% INCREASE

JULY 2016 JULY 20172.8% INCREASE


London Rents in detail–Above shows the average monthly rents for London, along with the average rents for high yielding buy-to-let areas

Gross Yields–For higher yielding London buy-to-let investment areas, the average yield was 4.5% in Q3 2017, down from 4.6% in Q2 2017 and up from 4.4% in Q3 2016.

Net Yields–Net yields in Q3 2017 were 3.5%. Our calculations show that total running costs for a buy-to-let investment have been running at an average of 22% of rental income for the last three years. This includes all costs, such as:• Repair and maintenance • Letting fees• Service charges• Other one off cost payments.

Total Return Figure–Gross total return for high yielding London buy-to-let investment areas was 5.5%, down from 9.3% in Q2 2017, and down from 14.5% in Q3 2016. The net total return for London’s high yielding buy-to-let areas was 4.5%, down from 8.3% in Q2 2017, and down from 14.5% in Q3 2016. LSL has average total return figures across England and Wales of 4.4% in August 2017. This figure highlights the strong performance of London for residential investment.Source LSL buy-to-let index.

Arrears–Core arrears for ludlowthompson managed properties were 1.04% in Q3 2017, down from 1.13% in Q2 2017, and down from 1.42% in Q3 2016. LSL arrears were 13.7% of all rent across England and Wales in July 2017.

MONTHLY RENTS HIGH YIELDING BUY-TO-LET INVESTMENT AREAS–Q3 2017 £1,825 Q2 2017 £1,771 AVERAGE RENTSPRIME LONDON–PRIME LONDON £2,828 SUPER PRIME £5,015 AVERAGE RENTS LONDON-WIDE–UP 1.6%Q3 2017 £2,137Q2 2017 £2,114 These Q3 numbers reflect the traditional slight increase in rents seen as new students, new joiners, and recent graduates come to London to start new courses and jobs.

NORTH LONDON–AVERAGE Q3 2017 £1,795 Q2 2017 £1,769 ▲ 1.49% Q3 2016 £1,852 ▼ -3.07% –HIGH-YIELD Q3 2017 £1,664 Q2 2017 £1,635 ▲ 1.8% Q3 2016 1,681 ▼ -1.01%

WESTEND –AVERAGE Q3 2017 £3,202 Q2 2017 £2,990 ▲ 7.07%Q3 2016 £3,265 ▼ -1.94%

CITY–AVERAGE Q3 2017 £2,958 Q2 2017 £2,833 ▲ 4.41% Q3 2016 £3,099 ▼ -4.56%

NORTH WEST LONDON–AVERAGE Q3 2017 £2,542 Q2 2017 £2,486 ▲ 2.25% Q3 2016 £2,775 ▼ -8.39% –HIGH-YIELD Q3 2017 £1,908 Q2 2017 £1,885 ▲ 1.22% Q3 2016 £1,928 ▼ -1.04%

WEST LONDON–AVERAGE Q3 2017 £2,893 Q2 2017 £2,827 ▲ 2.34% Q3 2016 £2,915 ▼ -0.74% –HIGH-YIELD Q3 2017 £1,878 Q2 2017 £1,841 ▲ 2.01% Q3 2016 £1,811 ▲ 3.7%

SOUTH WEST LONDON–AVERAGE Q3 2017 £2,933 Q2 2017 £2,976 ▲ 0.56% Q3 2016 £3,198 ▼ -6.85% –HIGH-YIELD Q3 2017 £2,070 Q2 2017 £2,118 ▼ -2.27% Q3 2016 £1,889 ▲ 9.58%

SOUTH EAST LONDON–AVERAGE Q3 2017 £1,547 Q2 2017 £1,522 ▲ 1.60% Q3 2016 £ 1,556 ▼ -0.56% –HIGH-YIELD Q3 2017 £1,509 Q2 2017 £1,490 ▲ 1.28% Q3 2016 £ 1,523 ▼ -0.92%

EAST LONDON–AVERAGE Q3 2017 £1,566 Q2 2017 £1,635 ▼ -4.21% Q3 2016 £1,575 ▼ -0.55%

LONDON’S AVERAGE MONTHLY RENTS–Q3 2017

Two-bedroom modern development in Bow Road£385,000, renting for £1,516 pcm, with a 4.7% Gross Yield–Available for sale via the Bow office, call 020 8150 3325

One-bedroom Victorian conversion apartment in Wanstead£300,000, renting for £1.083 pcm with a 4.3% Gross Yield–Available for sale via the Bow office, call 020 8150 3325

Two bed purpose-built house in Tooting Borders£380,000, renting at £1,450 pcm with a 4.57% gross yield–Available for sale via the Wandsworth/Tooting office, call 020 8682 1234

Purpose—built studio flat in Finsbury Park£250,000, renting for £1,000 pcm with a yield of 4.8%–Available for sale via the Finsbury Park office, call 020 7704 5777

One bed conversion apartment in East Dulwich £400,000 and renting for £1,300 pcm, with a 3.9% yield–Available for sale via the Dulwich office, call 020 8299 8777


TOP 10 BTLOPSOPPORTUNITIES FOR INVESTORS – See the gross yield and rental for hundreds of properties For Sale across London at www.ludlowthompson.com/buytolet

Two- double bedroom apartment in Islington£665,000 and renting at £2,150 pcm, with a yield of 3.9%–Available for sale via the Finsbury Park office, call 020 7704 5777

Two bed maisonette conversion apartment in Sydenham£425,000, renting at £1,400 pcm, with a yield of 3.9% –Available for sale via the Dulwich office, call 020 8299 8777

Three-bedroom converted apartment in Camberwell£535,000, with a rental of £1,950 pcm, with a yield of 4.4% –Available for sale via the Oval office, call 020 7820 4100

One bed, modern complex apartment in Finsbury Park£420,000, renting at £1,400 pcm, with a yield of 4%–Available for sale via the Finsbury Park office, call 020 7704 5777

One-bed Georgian conversion apartment in Limehouse£325,000, renting at £1,250 pcm, with a 4.6% yield–Available for sale via the City/Docklands office, call 020 7480 0120


CURRENT BTL MORTGAGE OFFERS– 3 YEAR FIXED2.35%VIRGIN MONEY £1995.00 LENDERS FEE WITH £500 CASH BACK INCENTIVE–5 YEAR FIXED2.69%THE MORTGAGE WORKS£1995.00 LENDERS FEE

REMORTGAGE WITH A LOAN TO VALUE OF 60%–2 YEAR FIXED1.33% POST OFFICE£1495.00 LENDERS FEE WITH FREE LEGAL & VALUATION–3 YEAR FIXED1.69% VIRGIN£1995.00 LENDERS FEE WITH A £500 CASH BACK INCENTIVE–5 YEAR FIXED2.09% VIRGIN£1995.00 LENDERS FEE WITH A £500 CASH BACK INCENTIVE

For more information on buy-to-let opportunities or for a one to one meeting with the ludlowthompson team, please email [email protected]–For mortgage advice please contact your local ludlowthompson office to arrange a meeting with Chris Lockley at Jigsaw Mortgages


ACTON172 High Street, London W3 9NN T 020 8752 9988 E [email protected] Coverage includesActon, South Acton, East Acton, Ealing,West Acton, North Acton, Gunnersbury, South Ealing, Chiswick, Ravenscourt Park, Ealing Common, West Ealing, Shepherds Bush, White City, Hammersmith.

BOW634-636 Mile End Road, Bow, London E3 4PH T. 020 8150 3325 E. [email protected] Coverage includes Bow, Bromley By-Bow,Victoria Park, Docklands, Bethnal Green, Haggerston, Dalston, Hackney, Stratford, Manor Park, East Ham, and Forest Gate.

CANADA WATERUnit 2 Montreal House,Surrey Quays Road, London SE16 7AQT 020 7101 0235E [email protected] includesBermondsey, Canada Water, Canary Wharf, Limehouse, Rotherhithe, Surrey Quays, Wapping.

CITY/DOCKLANDS 3-5 Dock Street, London E1 8JN T 020 7480 0120 E [email protected] Coverage includesTower Hill, City of London, Wapping, Isle of Dogs, Bow, Bethnal Green, Aldgate, Stepney, Brick Lane, Mile End.

LEWISHAM 258 Lewisham High Street,London SE13 6JX T 020 8613 9696 E [email protected] Coverage includes Lewisham, Greenwich, Blackheath, New Cross, Hither Green, Lee, Deptford, Kidbrooke, Eltham, Ladywell, St. John’s, Catford, Woolwich, Thamesmead, Plumstead.

WANDSWORTH/TOOTING 62 Tooting High Street, London SW17 0RN T 020 8682 1234 E [email protected] Coverage includes Wandsworth, Balham,Tooting Broadway,Tooting Bec, Colliers Wood, Streatham, Earlsfield.

WIMBLEDON 43-45 Wimbledon Hill Rd, London SW19 7NA T 020 8405 5432 E [email protected] Coverage includesWimbledon Village/Town, Southfields, South Wimbledon, Raynes Park, Merton Park, Earlsfield, Putney, Fulham, West Kensington, Chelsea.

See Area Office location maps at: www.ludlowthompson.com/contactus ludlowthompson.com Limited is registered in England at Apex House,4 Berkeley Business Park, Wainwright Road, Worcester, WR4 9FARegistered Number: 6959011VAT Number: 100106501.

DULWICH 81-83 Lordship Lane, London SE22 8EP T 020 8299 8777 E [email protected] Coverage includesDulwich, Herne Hill, Forest Hill, Brockley, Peckham, Sydenham, Crystal Palace, West Norwood, New Cross, Nunhead, Tulse Hill.

FINSBURY PARK 6 Blackstock Road, London N4 2DL T. 020 7704 5777 E. [email protected] Coverage includesFinsbury Park, Stoke Newington,Islington, Highbury, Crouch End, Tufnell Park, Holloway, Hampstead, Camden Town, Highgate, Hornsey, Muswell Hill, Tottenham

KENNINGTON/OVAL10-12 Clapham Road, London SW9 0JG T 020 7820 4141 E [email protected] Coverage includes: Kennington/Oval, Stockwell, Clapham, Battersea, Brixton, Camberwell, London Bridge, Pimlico, Waterloo, Walworth.

KILBURN/WEST HAMPSTEAD 381 Kilburn High Road, London NW6 7QE T 020 7604 5100 E [email protected] Coverage includes Kilburn, Queens Park, Brondesbury, Maida Vale, St John’s Wood, Marylebone, Cricklewood, Hendon/Harlesdon, Kensal Green, Kensal Rise, Bayswater, Notting Hill.

DisclaimerInvestments can go up as well as down. This publication is not advice and nor can it take account of your own particular circumstances. Financial advice must always be sought from a professional financial adviser. Your home may be repossessed if you do not keep up repayments on your mortgage. The Financial Services Authority does not regulate some forms of mortgage.

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AUTUMN REVIEW Inside London rental prices in detail · House Prices – In England and Wales, the respective figures were £237,721 in July 2017, up 5.2% from July 2016 (£225,895)