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The best of both worlds

8th October 2016

Last week we finally exchanged on a property in Quebec Ct, which is in Seymour Place, W1.  The property is only around the corner from Cumberland Hotel in Marble Arch, where prices range from £171 per night; and this rate is probably the lowest of the low seasons.

The reason why this is noteworthy, is because one of the main reasons why this property is being purchased is for it to be short let, meaning rented for a time period of less than six months.  Renting at £170 per night would mean the yearly rental will be £62k, giving a gross yield of 10% on a purchase price of £625k.

In W1, this is unheard of, these are the yields you typically get in the north of England, where you sacrifice capital growth for yield.  There the prices don’t go up for years, but there is surplus cash at the end of every month, after paying your mortgage.

The property was purchased by a client who bought it blind, despite this being the first deal he has done with us, purely off the back of a referral.  We attempted to conduct a viewing but couldn’t make the times match, and the time for doing the deal came before we could arrange a viewing.  The quick exchange was propelled by the freeholder expressing interest in purchasing the property for a higher price.  This gave us the impetus to exchange quickly.

Although given the current uncertain, and at best flattish, market, my opinion is low end flats will still be selling fast.  We are focusing on getting properties which have high yields, but are in solid locations.  This is generated through two ways, one is through room lets and the other is focusing on properties which are favourable for short lets.

We have two properties that meet this criteria in the pipeline.  One in Camden, an area which is undergoing major regeneration, this property is perfect for the student market, and can be rented on a room basis to obtain a rental of nearly 10% on a purchase price of half a million.  The other is a deal which refuses to die in Covent Garden, this one due to its locality is perfect for short letting.

Both of these deals are ready to be concluded, we have the contracts in and the lawyers are ready for a quick exchange.  It is rare where you’re able to obtain the best of both worlds, a high rental and to purchase in an area where you have tremendous capital growth.  The current market allows you to pick up these gems.  Get in touch, if you would like to take advantage of this market.

Suresh Vagjiani

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