Can I suggest that before you purchase a property in London that you address the following?
1. What is your target net yield of your proposed investment property.
2. Have you made realistic assumptions in relation to calculating this yield,
you should speak to at least three letting agents to obtain an idea of a realistic monthly rent. You should also ask them to be frank about average void periods. You should have a good grasp of the service charge costs associated with your potential investments (you’ll be paying them)
3. Not only should you consider the present property market in your search area you should also consider any developments in the pipeline, additional supply will have an effect on rents and void periods. Contact the duty planning officer in the Local Authority they will usually give you a brief overview of the development stream.
4. Will your investment decision be influenced by a possible fall in capital values in the medium term? if so act with caution.
5. When you find a property, go and find two more and make lowball offers on all three, (you don’t hit a 180 with one dart) then do a deal with the most compliant vendor, have all the necessary mortgage approval in principal etc. in place at this stage to show vendors and agents that you are a serious punter. Remember that if a vendor is not insulted by your offer you have offered too much. Try to employ some charm in this process explain that you have to make a return that will cover your costs and that you have concerns about the future prospects of the market. In the London market at present vendors are fishing for buyers so its important that you understand the relative strength of your negotiating position.
6. Finally make sure that you undertake enough research to understand what represents value for money in your target market. Don’t assume that agents know, by the way, if they did they’d be property moguls.
Good luck