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The Ultimate Guide to Property Investment in London

Becoming a landlord can be extremely rewarding and is a fantastic option for homeowners looking to generate income from a property they own. Property is one of the safest investments that you can make, and becoming a landlord poses many unique benefits.

When purchasing a buy-to-let property as a landlord, the location should be one of the main deciding factors, as this can significantly influence rental costs and demand. With a population of nearly nine million and home to 15% of the UK population, London is renowned for being one of the best places to live and work. 

Whether you’re new to investing or looking for the best location to invest, London is a fantastic location and has so much to offer for investors and renters alike.

In this guide, we will explain how to get into property investment, where to buy investment property in London, and share some  property investment tips.

Is London the Best Place to Invest in Property?

As the capital of the UK, London has long been considered the place for property investments in the country. With the amount London has to offer, it’s no wonder more and more people want to live there.

While the cost of living is higher than anywhere else in the UK, London has so much to offer residents who can afford the commanding premium of capital city living. 

Buying a property in London is a great investment for your money, and current market conditions have never been better. With house prices continuously rising in the capital leading to higher demand to rent, it’s an opportunity that shouldn’t be missed. 

Perhaps a considerable benefit of investing in London is the sky-high rental income generated from properties, meaning that landlords can gain a huge return on their investment.

According to a study published by Statista in January 2022, Greater London was not only the region with the priciest average rent at £1,752 but also the region with the highest annual increase. In fact, the average rent in London is so high that it trebles the rent in every popular UK property investment hotspot.

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Where to Invest in London Property

Like any type of investment, knowing where to invest your money is going to be the most important aspect of getting a great return on investment. 

Demand for rental areas has changed slightly following on from the pandemic, with tenants searching for more value for their money in order to get that extra bedroom or some outside space. Areas with local green spaces and lush greenery are becoming increasingly popular with London tenants, alongside areas with a warm community.

Some of the best places to invest in London includes Richmond, Clapham, Putney, Battersea, Islington, Hackney & Ealing, where interest is booming and renters have local access to open spaces.

Getting a Return on Your Investment

Before investing, it’s worthwhile to understand that there is no ‘fast’ way of getting a return on your investment. The quickest way to get a return on your investment is by buying property at a discounted rate and immediately selling it at a higher price to make a profit. Another method is by ‘flipping’ a property or with self-builds, providing that they can be turned around in a timely manner.

Of course, any form of investment will involve risks, so we do advise having some experience in the market. Therefore, we do recommend researching the location, rent/price ratio, population growth, school districts, convenience, safety, crime rates, public transportation, neighbourhood, infrastructure, councils and local laws.

Starting small is the best advice for investing in property, and over time, you’ll be able to maximise your property portfolio

How to Become a Property Investor in London

Arrange a Buy-to-Let Mortgage

Once you have decided you would like to invest in property, you’ll need to arrange your buy-to-let mortgage. For this, you will be expected to provide comprehensive paperwork during the application process and provide proof of funds for your deposit (typically 25%).

You will also need to prove that you are able to afford the monthly repayments by showing evidence that rental payments will cover your monthly repayments. 

Find a Property

Investment properties can be exciting and very rewarding if you make the right choice. As the capital of the UK, London has long been considered the best place for property investment in the country.

And as general guidance, buy-to-led lenders will usually expect your rental income to meet at least 125% of the monthly payments on your mortgage loan.

battersea power station

Find Suitable Tenants

It can also help to use a trusted lettings agent who can locate suitable tenants for you, with a tailored marketing campaign to advertise your property to prospective tenants. A lettings agency can even complete thorough tenant reference checks and handle administration throughout the tenancy.

Manage Your Property

While property investment can be extremely rewarding, it can take a lot of time to manage your property and ensure you are following all regulations – particularly with regulations updating every so often.

We always recommend using a lettings agent in London, like JOHNS&CO, to manage your property and deal with any problems as they arise, keeping you and your tenants happy.

A letting agent can provide you with a tailored range of services, including a dedicated property manager on-site, professional advice on rental legalities, and the overseeing of any issues or queries on behalf of your tenants.

Maximise Your Property Portfolio

If you’re looking to expand your property folio by investing in more properties, seeking help from a lettings agency will mean that you have more free time to focus on new opportunities to add to your rental portfolio. 

For more information on expanding your portfolio, we recommend taking a quick read of our guide, How to Maximise the Value of Your Property Portfolio.

Using a Letting Agent

As a landlord with JOHNS&CO, you will receive a tailored range of services from our experienced lettings team. This will allow you to benefit from a dedicated property manager on-site at each development we represent, a tailored marketing campaign to advertise your property to rent and our vast links with corporate companies. You can also be sure of efficient handovers, professional advice for rental legalities and even furniture installation.