Is now the time for London’s buy to let resurgence?
- London rents to rise by 15.9% in 5 years to 2023 – faster than UK average (Savills)
- Luton voted 2019 top commuter hotspot (Jackson-Stops)
- New development The Orion key to addressing Luton’s housing shortage (Surrenden Invest)
With prices correcting over the last two years, London has definitely not been the choicest of locations when it comes to buy to let investments. However, specialist property investment agency Surrenden Invest believes that the capital’s fortunes are on the turn, making now the ideal time to consider commuter belt properties in areas of pent-up demand, such as Luton.
“Life in Luton means easy access to the best that London has to offer but without the capital’s extortionate housing costs. The town has excellent amenities with a lively local culture that appeals to those looking to balance access to London with a realistic lifestyle. This is one of the reasons that Luton exhibits such excellent growth potential.”
Jonathan Stephens, MD, Surrenden Invest
According to Savills, London will lead the UK’s compound rental growth over the five years to 2023, with growth or 0.5% this year accelerating to 1.5% in 2020, 4.0% in 2021 and 4.5% in the following two years. The overall growth rate of 15.9% compares to growth across the rest of the UK (excluding the capital) of just 11.5%. This is certainly good news for those looking at investing in residential property in and around London.
Luton is a growing town that is known for being one of London’s most sought-after commuter locations. Indeed, Jackson-Stops has just flagged it up as the top commuter hotspot for 2019.
Luton is located 30 miles north west of central London. Direct trains run into London St Pancras International in as little as 22 minutes. 167 trains per day provide an almost round-the-clock service. Rents, meanwhile, are around 1/3 of the cost that they are in London. For renters, it is the ideal combination.
Luton’s population is increasingly rapidly. Between 2018 and 2041, the Office for National Statistics projects that the town’s population will grow by 12.9%, to 248,500. At the same time, it is in the grips of a serious housing shortage, as is the case with many towns and cities in the UK. However, Luton’s housing shortage is more acute than most, with Project Etopia projecting that it will be 22.1 years behind where it needs to be in terms of housebuilding by 2026, if the current rate of development continues. At present, Luton is building 430 new homes per year – it needs to be building 1,417 to meet demand.
One development racing to meet this demand is The Orion, located just minutes from Luton train station and town centre. The 67 high-end apartments are precisely what contemporary renters are seeking – high-spec homes in a superb location that provides easy access to both London and Luton itself. Offering a mix of one- and two-bedroom homes, they are also ideal for investors looking to capitalise on the resurgence of the London commuter belt as an investment prospect.
Luton’s housing shortage spells good news for buy to let investors over the longer term, as it points to a sustained level of demand for private rented accommodation in the town, as tenants snap up those homes that are available. It also has the potential to drive up house prices (as well as rents and yields). Luton is already bucking the trend in terms of house price rises. While many southern locations are seeing a market correction at present, with falling prices or nil growth, Luton’s prices rose by 1.6% in the year to April 2019. Savills, meanwhile, projects growth of 9.3% in the five years to 2023 for the wider South East region.
In terms of its rental market, Luton enjoys an average rent of £632 pcm for a one-bedroom apartment and £828 pcm for a two-bedroom one, according to Zoopla – significantly less than equivalent homes in London.
“It is Luton’s combination of capital growth potential and pent-up demand for private rented sector homes that has caused the town to top LendInvest’s UK buy to let index for so much of the past three- or four-year period. This is a town with outstanding growth potential.”
Jonathan Stephens, MD, Surrenden Invest
For more information, visit www.surrendeninvest.com or call 0203 3726 499