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&#39London BTL yields are lowest in the country&#39

Investors are getting lower returns from buy-to-let properties in London than anywhere else across the country, according to the Association of Residential Letting Agents.

Its new quarterly survey of the market conducted during the summer months covered 500 letting agents and reveals that the average rate of return in central London was 5.6 per cent compared with 6.1 per cent in the rest of the South-east and 7 per cent across the rest of the country.

It found oversupply is a more significant problem in central London, where 84 per cent of agents reported too many properties, compared with 63 per cent in other areas of the South-east and 47 per cent in the rest of the country.

Arla says the survey underlines the significant differences in capital values across the country, with the average London property valued at £258,000 compared with £160,555 in the rest of the South-east and £106,000 in other areas.

Since April, there has been an increase of 6 per cent in the average values of BTL properties from £156,700 to £166,100.

But Arla says in central London the average growth was only 0.1 per cent from £257,742 to £257,485.

In the rest of the South-east, the average rose by 9.8 per cent from £146,200 to £160,500 and across the rest of the country by 6.7 per cent from £99,300 to £106,010.

Arla chairman John Crossley says: “The first issue of this new quarterly survey series shows that the private rented sector is an active, fluid market.

“Investment in the private rented sector remains a sustainable investment as it takes account of the fluctuations both of capital appreciation and rental demand.”


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