Last week, a couple from the Knatchbull Road area came to discuss potentially investing in property for Buy to Let. One of the most important considerations you will make before investing is the balance between annual return/yield and the annual value increase/capital growth. Knatchbull Road is mixture of period houses and has the 9th highest average prices as a street in Camberwell. The average price of a property is £821,000, and a 2 bed flat rents out for an average of £1600 pcm.
With this in mind, it was a surprise to find that a 2 bed flat on Sceaux Gardens, off Dalewood Street, has outperformed those on Knatchball Rd. This is because a 2 bed flat Sceaux Gardens can be bought for around £185k and the achievable rents can be around £1,250 per calendar month.
The gross yield which could be achieved from property on Sceaux Gardens is around 8.1% per year. When we compare this to the possible 3.8% ( a 2 bed will cost you £500k) on Knatchball Rd you can see the yield is nearly 113% higher on Sceaux Gardens. However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. The average value of a 2 bed flat on Sceaux Gardens in 2000 was £78.3k, which has since risen by 137% in the last 12 years. A 2 bed flat on Knatchball Rd in 2000 was £159k, meaning the value has increased by an impressive 214% in the same 12 years. So when you look at it more closely and examine the overall growth you would have been much better investing in Knatchball Rd but it’s a risk relying on capital growth alone so always do your research first.