London has few tenanted properties for buy to let investors

London has few tenanted properties for buy to let investors

0:01 AM, 29th April 2024, About 5 months ago 7

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Finding a buy to let property with a tenant already in place can be a challenge for investors in London, according to new research.

Lettings and estate agents Benham and Reeves reveal that just 2% of currently listed rental properties in the capital boast of having a tenant in situ.

While rental yield is a key consideration for BTL investors, void periods can significantly impact returns.

The firm says that buying a property with an existing tenant eliminates this initial void period and saves time and money on tenant finding fees and referencing.

‘Voids can be a significant thorn for buy to let investors’

Marc von Grundherr, a director of Benham and Reeves, said: “Void periods can be a significant thorn in the side for buy to let investors and will seriously reduce the earning potential of their investment if they drag on for too long.

“So, a tenanted property can make for a very appealing investment opportunity as it allows a rental income to be generated as soon as the deal has been done.”

He added: “While London is home to the lowest proportion of tenanted property availability for current investors, they need not worry.

“Such is the imbalance across the capital’s rental market that any available stock is letting at a phenomenal pace and so they can rest assured that if they do bring an empty property on the market, any void period is likely to be very short lived.”

Buy to let properties across England

The study analysed buy to let properties across England and found that nationwide, there are only 11,000 currently listed properties that include a tenant.

The North West emerged as the region with the highest availability of pre-tenanted BTL properties, making up 21% of the national total.

Other regions offering a good selection include the South East (16%), Yorkshire and the Humber (14%), and the East Midlands (13%).


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Ian Narbeth

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11:19 AM, 29th April 2024, About 5 months ago

They are correct and if the market would accept tenanted properties, that would save time and money and mean that tenants were not asked to leave because the landlord wanted to sell.

The problem is buyers and mortgagees are fearful of inheriting a shed load of problems if the seller has not got the increasingly complex paperwork associated with tenancies in order or if the tenants turn out to be wrong 'uns. There is little sign that evicting defaulting tenants will be made quicker or that the administrative burden on landlords will be reduced this side of the Second Coming so don't hold your breath that the number of available investments will increase.

northern landlord

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17:25 PM, 29th April 2024, About 5 months ago

Of course there isn’t much property available with a tenant in situ. We all know that trying to sell with a tenant in place only addresses a small section of the market. There are the vulture companies like those in this same issue who write scare stories like ”Landlords will be annihilated’ so better sell via us at 30% off market value. What happens then I don’t know, will the property will be bought by the company itself or a speculator, the tenant evicted and the property sold for a quick 30% profit?

GlanACC

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19:05 PM, 29th April 2024, About 5 months ago

I have purchased 1 property with a tenant in situ, that was over 20 years ago and he is still there - divorced and remarried. Nice chap but every time I meet him se says he has surely paid for the property by now. He has ..

LordOf TheManor

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19:42 PM, 29th April 2024, About 5 months ago

Reply to the comment left by northern landlord at 29/04/2024 - 17:25
Well said, Northern Landlord!!

Said Vulture Company tried hard to persuade me to part with my well-maintained and picture-perfect house with long life guarantees still in place for roof, damp course, kitchen++ for 30% less than market value - even with blue chip tenants in it!

Scare stories - huh? They weren't going to kid someone like me. I self-managed the house for 23 years and I wouldn't be lying to say the only void I ever had was during the full refurb in 2010.

I therefore politely asked the tenants to leave so that I could sell it unencumbered at a price that rewarded my investment and time spent with the property, albeit minus the huge CGT bill. The house, when vacant, flew off the estate agent's shelf in no time for 40% more than the Vulture Company's offering. Unless you're super desperate, the word is DON'T!

NB: In response to the stats provided by the OP: with 21% of landlords in the NW wanting to off-load their tenanted properties (via the easiest but most costly way) onto another landlord - why is this? What's the real story?

GlanACC

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7:39 AM, 30th April 2024, About 5 months ago

Reply to the comment left by LordOf TheManor at 29/04/2024 - 19:42
These so called 'vulture companies' DO fill a gap in the market. If you don't like their offer don't take it. I sold an empty property to one of these companies at about 15% discount. I couldn't get an EICR for it without a total rewire which by the time the kitchen had been removed and refitted and redecoration and re-plastering would have cost me the thick end of £20k - it was actually cost effective to get rid of the property this way AND they paid my solicitors fee AND they didn't require any searches AND I got the money in 14 days. Just like everyone else they have to make a living 20 to 30% seems the going rate, I think I got a good deal.

LordOf TheManor

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11:09 AM, 30th April 2024, About 5 months ago

Reply to the comment left by GlanACC at 30/04/2024 - 07:39Yes, I don't disagree with you. For distressed properties where the owner doesn't have the means or the time to spend with a property destined for sale any way, selling does make perfect sense!

I inherited one of these properties in 1995. I couldn't get rid of it and with the interest base rate running at 15% it was a costly nightmare to turn it round and it nearly took me under. I'd have definitely sold it if that were possible at the time and been more than happy with 15% discount!!

It's come good over time and the two flats I made of it now bring in £2k per month in total. I just wouldn't sell either now to a company for 30-40% less than market value.

Michael Booth

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14:26 PM, 30th April 2024, About 5 months ago

Been in prs for 24 years+my model is to let property out at just below market rates no problem with void periods only if you get a pig of a tenant and you need to repair before re let

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