Landlords in east London buck trend by turning a profit during pandemic
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One of the very few areas for landlords to make profits renting out their properties during the pandemic has been revealed as east London, according to insurers.
Three east London boroughs are among only six proving to show good returns for buy-to-let investors.
Top of the list of all 33 London boroughs is Barking and Dagenham, while Newham is third and Tower Hamlets fifth.
Only six of the 33 are profitable for renting out, a 48 per cent drop on last year’s rating, according to a survey by CIA landlord insurers.
“Being a landlord can provide a lucrative income if planned correctly,” a spokesman said. “But many people may jump into it without fully understanding what’s required – when it comes to finances, licence fees, maintenance costs, mortgage payments, letting commissions and landlord insurance."
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The worst area for investment compared to a year ago, surprisingly, is Kensington and Chelsea -showing a move away from renting in central London during the pandemic, towards the suburbs and especially east London, researchers have found.
Average rents have reached £1,371 a month in Barking and Dagenham, against £1,048 mortgage payments, leaving £261 profit.
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Newham’s average £1,516 rent is against mortgages of £1,271 which makes a tidy £183 profit, while higher average rents of £2,188 in Tower Hamlets with mortgages at £1,975 leaves £150 clear.
By contrast, Havering’s average £1,318 rent made a loss for the landlord of almost £93. But it was still the seventh best result out of 33 boroughs.
Average east London property prices, however, steamed ahead reaching £575,000 in Tower Hamlets, compared to £393,000 in Havering, £370,000 in Newham and £305,000 in Barking and Dagenham.
Nearly all other areas of London are proving a rental loss during the pandemic apart from Westminster, Southwark and Brent, according to the CIA landlords survey. These are areas like the City including Aldgate and Tower Hill where properties worth an average £925,000 are being rented out for £3,100 a month — but making a loss of £133.
Landlords need to spend an average £1,134 a month in 2021, researchers have found, which includes mortgages, keeping properties up to scratch, letting agency fees and insurance.