London has lowest level of tenanted properties for buy-to-let investors

The latest research by London lettings and estate agent, Benham and Reeves, has revealed that while a rental property with a tenant already in place may be a desirable feature for many buy-to-let investors, they are likely to struggle to find this added bonus in the London market, with just 2% of current listings offering a tenant in situ. 

Benham and Reeves analysed current market data* looking at the number of buy-to-let properties listed for sale across the market in England that come with a tenant already in place and how the availability of these investment opportunities differs from one region to the next. 

While yield is often the initial focus for buy-to-let investors, one other pivotal factor that is influential when it comes to a successful investment is void periods. A strong yield is great, but if your property is subject to prolonged void periods with no tenant in place, it can seriously dent the return seen over the course of the year. 

Deposit process

Investing in a property with a tenant already in place is one way to hit the ground running, as not only are there no initial void periods, but you also save time and money during the stages with respect to tenant finding fees, as well as the referencing and deposit process. 

However, the analysis by Benham and Reeves shows that, in the current market, there are only a little over 11,000 rental properties offering the addition of a tenant in situ. 

The North West boasts the largest abundance of pre-tenanted buy-to-let investment properties, accounting for 21% of the national total. 

The South East ranks second at 16%, although Yorkshire and the Humber (14%), the East Midlands (13%), East of England (11%) and West Midlands (11%) also offer a similar degree of tenanted property investment opportunities. 

Buy-to-let investments with a tenant in place are fewer and further between in the South West and North East, with each region accounting for just 5% of the national total respectively. 

Deal has been done

But it’s London where investors will have the hardest time finding the added bonus of an existing tenant in place, with the capital home to just 2% of all tenanted properties currently listed for sale. 

Void periods can be a significant thorn in the side for buy-to-let investors and will seriously reduce the earning potential of their investment if they drag on for too long. So, a tenanted property can make for a very appealing investment opportunity as it allows a rental income to be generated as soon as the deal has been done. 

While London is home to the lowest proportion of tenanted property availability for current investors, they need not worry. Such is the imbalance across the capital’s rental market that any available stock is letting at a phenomenal pace and so they can rest assured that if they do bring an empty property on the market, any void period is likely to be very short lived.”

Data tables and sources

*Tenanted property data sourced from PropertyData and regional availability calculated by Benham and Reeves.

Data tables and sources can be viewed online, here.