4 Hamptons International
Acquiring an investment property
Factors to consider
Location
Investment properties should be close to
transport facilities and within easy reach of a
good range of local amenities. It is important
that you buy the right property for the market,
so take time to find out about the typical tenant
in your chosen area and the likely levels of rent
they will pay. Once you have pinpointed your
target tenant group, choose properties that
will appeal to them.
Freehold vs leasehold
Ideally you should purchase a freehold
property. Where this is not possible – in
areas like central London for example, where
freeholds are not widely available – ensure
that your potential investment property has
The investment equation
a lease term of at least 75 years. Remember to
When assessing the potential yield of a rental
check that sub-letting is permitted under the
investment the following factors should be
head lease, and seek advice from your local
taken into account. The example below is
Hamptons International office about normal
based on the acquisition of a two bedroom
service charges and typical block management
flat in central London and is for general
arrangements.
guidance purposes only. Your local Hamptons
International office will be able to offer
Service charges
assistance with more bespoke investment
Levels of service charge vary depending on the
analysis.
range of services provided with the building
(for example: a caretaker, lift, concierge,
Gross yield is the achievable rent expressed as
leisure suite and gardener). These services
a percentage of the capital value of a property.
will often make the property more attractive to
A good yield will be of considerable interest
prospective tenants.
to any property investor, but it is wise to
remember that at times of high capital increase
the gross return will be reduced as the rent
often does not rise proportionately.
Purchase price (V) £500,000
Rent – assume £450 per week (W) £23,400
Gross yield (W/V x 100) 4.68%
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