Date Published 22 August 2016
So if you've recently bought or have been searching the Marylebone market for a new 1 or 2 bedroom property to add to an already existing collection of properties or even as a first purchase, then you may find this week's article particularly interesting and one which will certainly apply to you! Let me begin by telling you all that lately I have seen an overwhelming interest towards the rental market from buyers who have recently acquired properties and are now wishing to let them out, but one notable occurrence stems from an investor who is very new in the market and in fact hadn't invested in a London property for the purposes of immediately advertising it ‘for let' before. Nonetheless, he contacted me with a clear-cut plan to purchase either a 1 or perhaps a 2 bedroom property in our beloved Marylebone and asked for some guidance from me; he wanted to know what the current rental market in Marylebone looked as a whole, what sort of rental values could he expect from any potential purchases, and chiefly which Marylebone perimeter would be a profitable choice to start with. I told him that with buy-to-let investments, although figures and profits are one of the main components you should consider, it is certainly not the only one, and thinking about your target tenant is something that should certainly be contemplated. The worst outcome to arise out of purchasing a buy-to-let investment property is not having a tenant to occupy it, as it means losing out on rent money; instead of imagining the ideal place you'd like to live, try to picture yourself as your target tenant and what sort of property they'd expect. For example, if you're planning to take on board young professionals, they would be more likely to expect a modern and stylish property, whereas a family home would need to furnish many belongings and would require a lot of space - more of a blank canvas without much furniture or appliances provided. So bearing this in mind, whilst also considering the prices and figures that go with new investment choices, with a buy-to-let property the two main sources of profitability arise from property price rises and capital growth – both short term and long term, as well as rental income, which is the key return for this type of investment. Nonetheless, you should have rental income firmly noted as your main point of judgement, as capital growth increases can be unpredictable and unless you are deciding to sell soon after, it will not provide you with an expendable source of income. Although there are some investors who have the financial means to buy a property outright, many others will need to cover their running costs such as: mortgage costs, maintenance expenses, agents' fees, potential household bills and taxes. Thus, as I suggested to my client, when selecting a property to buy and invest in, it is imperative that we choose one with a strong rental income performance. I soon-after undertook some research for him, where I analysed 1 and 2 bedroom properties which are currently on the rental market in Marylebone, so as to give him an accurate and up-to-date indication of what sort of figures we should be expecting in the W1H, NW1, W1U and W1G Marylebone perimeters. I gathered up all the 1 and 2 bedroom properties in these areas, which are currently on the rental market and I drew up a current rental range from the cheapest to the most expensive rental prices being requested. I proceeded to highlight the average rental value (pcm) from each area, as well as the expected annual rental income that this sort of investment choice would generate.
Marylebone – W1H
1 bedroom properties for rent: Current Rental Range (pcm): (£1,473 - £3,685) – Average Rental Value: £2,396 (pcm) - Expected Annual Rental Income: £28,752
2 bedroom properties for rent: Current Rental Range (pcm): (£2,080 - £9,045) – Average Rental Value: £4,477 (pcm) – Expected Annual Rental Income: £53,724
Marylebone – W1U
1 bedroom properties for rent: Current Rental Range (pcm): (£1,625 - £5,417) – Average Rental Value: £2,658 (pcm) - Expected Annual Rental Income: £31,896
2 bedroom properties for rent: Current Rental Range (pcm): (£1,993 - £8,450) – Average Rental Value: £4,176 (pcm) - Expected Annual Rental Income: £50,112
Marylebone – NW1
1 bedroom properties for rent: Current Rental Range (pcm): (£1,365 - £4,117) – Average Rental Value: £2,362 (pcm) - Expected Annual Rental Income: £28,344
2 bedroom properties for rent: Current Rental Range (pcm): (£1,690 - £7,400) – Average Rental Value: £3,508 (pcm) - Expected Annual Rental Income: £42,096
Marylebone – W1G
1 bedroom properties for rent: Current Rental Range (pcm): (£1,733 - £7,150) – Average Rental Value: £3,235 (pcm) - Expected Annual Rental Income: £38,820
2 bedroom properties for rent: Current Rental Range (pcm): (£2,275 - £9,100) – Average Rental Value: £4,683 (pcm) - Expected Annual Rental Income: £56,196
To dissect and expand upon these findings, I can tell you that the Marylebone rental market is rich with opportunities where expected returns for both 1 and 2 bedroom properties vary considerably, not only between each area, but even within the same perimeters. We can see by our readings that rental values stretch up to £5,417 (pcm) from the lowest earning properties to the highest for 1 bedroom homes and this is even higher for 2 bedroom properties – with differences up to £6,825 (pcm). With regards to each Marylebone postcode's specific rental range, I can tell you that W1G has the greatest earning properties in its radius, with 1 bedroom rental prices starting off the most expensive at £1,733 (pcm), and according to the existing market, we can see other letting deals being advertised up to the £7,150 (pcm) mark. 2 bedroom properties in W1G also dominate the market with the highest rental starting points of £2,275 (pcm) – and more prestigious properties extending up to £9,100 (pcm). Conversely, looking at the properties currently for let, NW1 clearly provides the least rental capabilities for 1 as well as 2 bedroom residences, with prices starting as low as £1,365 (pcm) for 1 bedroom properties, and the highest earning 2 bedroom properties halt at around £7,400 (pcm). When combining all our locations, Marylebone as a whole has a very positive average rental value of £2,662.75 (pcm) for 1 bedroom properties, and a significantly higher median value of £4,211 (pcm) for 2 bedroom homes. Although these results are very optimistic, we can in fact manipulate the market and reach an even higher average for both 1 and 2 bedroom residences, if we decide to invest in the W1G area - with £3,235 (pcm) for the former property type, and an average of £4,683 (pcm) for the latter. Conversely, we can actually lose out on some rental potential towards our buy-to-let investment (according to current averages), with W1H and NW1 displaying significantly lower averages for 1 bedroom properties, whereas W1U follows NW1 as the lower performers for the 2 bedroom rental scene. Lastly, to analyse the expected annual returns of our chosen areas, W1G once again overpowers their rivals with an average yearly rental account of £38,820 for 1 bedroom investments - £6,924 more profitable on average than W1U, which has the second best total. As for 2 bedroom properties the highly-esteemed W1G hospital district unsurprisingly generates the best average expected rental income of £56,196, but this time the next closest area is W1H which has a narrower gap – with its median value standing at £53,724. I must explain however that, although the W1G area dominates the rental market with values far exceeding that of its rivalling areas – especially NW1, property prices are certainly the most expensive here on average and thus rental yields may actually be lower; so please judge each potential investment thoroughly for more rent doesn't always mean the best overall investment, even if it does mean the most annual income!
Should you wish to hear more about Marylebone's buy-to-let market, with particular focus towards how rental values are currently performing with respect to 1 and 2 bedroom properties, then don't hesitate to contact me, I am more than happy to share any knowledge with you.