How to make a lucrative property investment in London

A good property investment in London can be extremely profitable. The capital retains a very high demand for quality accommodation, which makes it very popular for property investors. But the sheer scale of London and the changing nature of the market means it can be intimidating and challenging. Here are some tips to help you with your investment.

Research, research, research

This applies to any kind of investment, but in a city as complicated and mercurial as London you need to put in some serious work on your research. The internet is a good place to start as you can find fantastic in-depth guides to London property and up-to-date statistics from the biggest names in the property market such as Zoopla.

But you will also need to get out and do some research with the people who know what is going on in the area. It is always smart to talk to estate agents – any time that you have a viewing with an estate agent, take the time to quiz them and find out about trends in the area. These are the people who work with property every day so they have a useful insight.

Cheap doesn’t necessary equal value

‘Cheap’ is not generally a word that you can associate with London property very often. The average property price in London over the last year topped £615,000, but there is still a large discrepancy between the most expensive and the cheapest areas; Central London homes sold for an average of over £1.6 million while those in East London had an average of £454,000.

This has led many investors to look for the areas with the lowest prices to try to find bargains. Areas such as Stratford and Haggerston some of the cheapest prices for homes but it is important to note that while these areas may have a low initial cost, the fact that they are cheap doesn’t necessarily mean that they offer the best value. London has notoriously low rent yields so it is actually better to choose properties that offer better rent yields and the potential for growth rather than simply those that cost the least.

Think long-term

Some investors in London make the mistake of putting too much emphasis on the short term growth potential of a property. But the key to making a success of a London investment is to think long-term and to understand both how you expect the property to perform in the market and at what point you wish to sell it (if you are planning to eventually sell).

Having a long-term strategy for your investment is the most effective way to make money from property in London. If you have a plan for exactly what you want from the property you will be able to more easily judge the success of the investment as time goes on.

Have a Plan B

Of course, long-term thinking is important but as we have already discussed, the London property market can be extremely volatile so it is vital that you have a backup plan. It was once the case that simply buying property in London was a guarantee that the value would increase due to the nature of the house market. But as the economy has slowed there have been increasing suggestions that many properties in London are currently overpriced. With the uncertainty of Brexit looming over the capital, property prices are forecast for only very slight growth over the next couple of years.

Ask yourself: would your investment still be profitable in the event that house prices do not increase? If not then you need to make sure that you have a plan B in the event of facing these challenges.

Look into upcoming developments and projects

It’s important to remember that upcoming developments and projects can complete transform the fortunes of areas across the city. Infrastructure changes such as Crossrail will bring further investment to the areas it passes through, so buying property on its route could be a smart move.

Respect your budget

As is the case with any good property investment, it is important that you should have a budget and be able to stick to it. London has such a huge range of properties and the cost involved in buying a flat or house here mean that it can be very easy to spend more than you have budgeted for. But you have to take the emotion out of your investment – don’t fall in love with a property that you can’t afford. The goal is to ensure that the purchase is profitable.