The Motley Fool

London’s landlords are deserting the capital! So where are they heading?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businessman scratching his head on white background
Image source: Getty Images.

Against a backdrop of slumping rental yields and stagnating property price growth, we’ve long suspected that the majority of buy-to-let activity is now occurring outside the capital, and recent data released by Hamptons International proves this without a doubt.

According to the estate agency nearly three in five London-based landlords — or 59%, to be precise — have purchased rental properties outside the city during the first 12 months, surging from 25% in 2010.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Due to high house price growth and a clampdown on landlord taxation, more London-based landlords have chosen to invest further afield in search of higher yields and lower stamp duty bills,” Hamptons said.

Buy-to-let investors are increasingly migrating northwards, the company’s data shows, with 34% of London landlords snapping up property in the Midlands or the North of England over the past year. This compares with just 14% in 2015 and 4% at the start of the decade.

That said, London remains by far the most popular buy-to-let destination for the city’s landlords, with 41% of purchases happening there.

Stamp duty rises. But so do rents…

Hamptons claimed that rising demand for homes outside The Big Smoke is chiefly because of the stamp duty surcharge introduced in April 2016, a change which has caused the number of Londoners taking on buy-to-let properties in their home city to fall by 17% since 2015.

To illustrate the impact of these stamp duty hikes for those purchasing second homes, Hamptons suggested that buy-to-let owners in London have faced an average bill of £24,600 over the past year. By comparison, an individual buying outside the capital has been forced to cough up a much-more-agreeable £5,330 in stamp duty.

It’s not all bad for landlords in the capital, though. According to the estate agency, rental growth in Greater London in March climbed by an average 3.7% year-on-year to £1,737 per month, the highest level on record.

This figure eclipses the 1.9% annual rise in rents on a nationwide basis, the average monthly rent in Great Britain hitting a figure of £969.

So what should you do?

Whether you live inside or outside the capital, there’s a lot to consider when you’re taking the plunge in the buy-to-let market. Some would even argue — and I count myself within this group — that the headaches are becoming far too numerous and severe, and that stamp duty isn’t the only thing to beware of. Just this week the government took steps to curb the power of landlords concerning the issue of tenant evictions, making the business of becoming a landlord even more troublesome.

So why bother with the hassle and the increasing expense of the rentals market? It’s not as if there are no opportunities to make a fortune by investing your money elsewhere, and particularly in the stock market. In fact, the booming number of ISA millionaires suggests that now’s a great time to pull your money from buy-to-let and to plough it into shares instead. And there’s plenty of help from websites like The Motley Fool to assist you in reaching your investment goals, whatever they may be.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.