The London Factor: Is the capital really that different from the rest of the country?
Why is London so popular?
If you live in London or if you’re a London landlord, you’ve probably never noticed that it is regularly mentioned in the media. But if there’s an article about the property industry, it’s likely that London is mentioned in some way.
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While London is the capital of England and a place people across the country and the world flock to for work and play, it’s not the best example of the UK at large. So how does London differ from the rest of the UK and why shouldn’t it be used as a case study for the rest of the country?
What makes London different from the rest of the UK?
There are many great cities throughout the UK, so what is it about London that makes it stand out so much – and is all of it positive?
London is one of the more diverse places in the country. As of 2021, 37% of Londoners were born in other countries (compared to 14% in the rest of the UK) and Londoners are more likely to identity as LGBTQIA+
Crime is rife in the city; in 2019 crime in the capital rose 5x faster than the rest of the country, with murder up 23%. Despite the diverse population of London, racially motivated or homophobic crimes are high
On average around 200,000 people move to London from other parts of the UK, usually for work
Unfortunately, London’s popularity is one of its drawbacks, with rents averaging £2,142 per month in 2021, which was a 5.8% increase on 2020 and is expected to go up another 1% in 2022
The city itself is a major draw, boasting around 250 theatres, 108 cinemas, over 3,500 pubs and almost 20,000 restaurants
While New York frames itself as the city that never sleeps, London does have a bedtime, with much of the transport networks stopping around midnight, along with most of the entertainment (unless you fancy a club night)
How was London affected during the pandemic?
London tends to be a base for a lot of people who usually go home for holidays like Christmas and Easter weekend. But the pandemic saw a mass exodus of people from London for a significant period of time.
Work from home orders and the closure of the entertainment that makes the city worth living in meant that people didn’t see any need to continue paying larger rents for so little return, so London based landlords saw their tenants packing up and leaving. Many people moved back in with their families in other parts of the country for well over a year.
However, now that restrictions have lifted and normality is reasserting itself, there has been a flood back to the cities and London is no different, which has had a huge impact on the property industry:
- Availability. Due to the surge in demand, many people have found it difficult to find a home in the area they had previously lived in, a more affordable area, or a property that suited their needs
- Rent increases. The huge competition for properties drove prices up across the country, but nowhere more so than in London which saw an average increase in rent of 5.8%
- Tenant turnover. Some landlords may find themselves needing to find tenants more regularly. The cost-of-living crisis, coupled with higher rents, has seen some tenants moving on more regularly, in search of cheaper homes to drive down their costs
How does this affect landlords?
Landlording in London can be hugely profitable, but you have to be careful with your investments:
- More expensive to invest. House prices in London are just as high as rents. Many people who are looking to buy their first homes in London are looking to move a little further out where prices are lower. If you’re looking to invest in a buy-to-let in London, it will be an expensive initial investment. Book a call with our mortgage advisors to get an idea of what you can afford
- A strong market. Demand is currently outstripping supply in London, driving rents up, so you aren’t likely to struggle to find tenants. However, it’s always worth making sure that you thoroughly reference your tenants to make sure they are the right tenants for your property
- Protect yourself. We are living in a time of rising costs. It’s not just rent that’s going up, bills are skyrocketing too and looking to increase again later in the year. So make sure that you have Rent Guarantee Insurance in case your tenants are affected by the increases
- Monitor your finances. London is expensive, so make sure that you’re keeping a close eye on your income and outgoings. You can use our free Expense Tracker to do this and make your life easier
If you choose to live or rent out property in London, you’ll know that life in the capital is different to the rest of the country. For the price you pay, you do benefit from access to one of the greatest cities in the world – but we hope that the media will start showcasing other cities around the UK that are just as vibrant and ripe for investment as our capital.