Will the property market in London continue to boom? Given the huge amount of increase in the price of properties in the capital in recent years, it is certainly now possible that the income generated by private landlords in London from rent could not be yielding enough compared to a sale. But for how long? Perhaps it is time to look at the benefits of selling a home you own, certainly if it is one of multiple occupation where your tenants have licences rather than full tenancies.
Houses of multiple occupation, or HMOs as they are known, have become an increasingly popular way to rent a room in London, especially among homeowners who let a bedroom and share common areas with them. However, the maintenance costs of keeping these sorts of properties to a high standard can be high, thus eating into landlords’ profit margins.
Why not consider selling up to another private landlord with your licensee or licensees in situ and buying similar properties in another part of the country which has seen less growth? This way, rental income is maintained whilst realising a proportion of the equity that has been derived from your initial capital investment.
There are plenty of private landlords looking to increase their portfolios, so making a sale should be no problem in a fast moving property. Obtaining the necessary capital to buy a new HMO elsewhere in the city or in the surrounding counties is relatively easy with interest rates at an historic low. Even if a conventional mortgage lender won’t consider making an offer to an owner-occupier who is also acting in the capacity as a landlord – and not all do – then there are good companies who deal in property financing without the need for a mortgage.
When looking for a new home, which it is possible to also let a portion of, finding something that is cheaper than your current property will allow you to access your equity growth. To do this, you needn’t look in destinations miles outside of the capital. Locations which are further away from tube stops or located in places with fewer civic amenities should all have comparable properties that are more competitively priced. Some districts are just that bit more cost-effective because they are not so fashionable, but buying in such locations, you can expect the greatest potential growth, perhaps allowing you to repeat the entire experience.
HMO Gross Yields and what is reasonable?, property118.com
London house prices: Growth in prime postcodes has declined to lowest rate in more than six years, Cityam.com