Location remains key for landlords, even on the M25
As a company based just outside the confines of one of the most notorious roads in the UK, it’s always interesting to hear the impact that the M25 has – without being too dramatic – on people’s lives.
It is certainly a fairly common topic of conversation here in the office, especially from those who live in ‘the inner circle’ and have to navigate some part of this beast. It’s strange to think that a mix of asphalt and tarmac can generate such a high profile not only for drivers and commuters, but also for homebuyers and landlords. It was also the basis of some recent analysis from lettings management platform, Howsy.
Before delving into how the ‘world’s biggest car park’ impacts landlords, here are three interesting facts I found out after some ‘research’ of my own.
• The M25 is 117 miles or 188.8km long and is the second longest bypass in Europe, after Germany’s Berliner Ring.
• It passes through six counties: Surrey, Berkshire, Buckinghamshire, Hertfordshire, Essex and Kent.
• There is a cricket pitch on top of the Bell Common Tunnel between junctions 26 and 27 at Epping Forest.
These were at least of some interest to me, but back to matters at hand. Howsy analysed junctions around the South section of the M25 in relation to the North section and found that yields around the Southern junctions of the M25 currently average 4.01% annually, compared to 3.61% along the North side.
For buy-to-let investors, Junction 31 was suggested to be the top pick for a rental investment with yields currently hitting 5.43% in the surrounding area. Junctions 9 (5.14%), 30 (4.67%), 1B (4.50%) and 15 (4.45%) are also home to some of the highest rental yields on the M25 ring.
From this data it appears that the Southern junctions of the M25 seem to be more ‘in demand’ and command a higher rental price than the North side. This might not be the age-old North v South debate as we know it, but it does highlight the continued importance of location and good transport links for tenants, with the report suggesting that the Southern junctions provide much quicker routes into the centre of London.
With further data from Howsey adding that landlords need an annual budget of £2,344 to cover repairs and maintenance, rising to £4,746 in London, it’s clear that landlords need to ensure that they maximise yields where possible in order to cover rising costs and recent tax changes.
We know that the BTL market extends way beyond the Southern boundaries as increasing numbers of landlords are looking North to increase and diversify their portfolios, but this remains an important area for many. And understanding trends across all areas of the UK remains key for landlords in successfully managing their portfolios now and in the future.