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Is Covent Garden a Good Property Investment Area for Landlords?

The Covent Garden area of London has plenty of opportunities for landlords looking to invest. It thrives on tourism, entertainment, amenities, and generally low crime rates. Therefore, on paper, the profile is amenable. Lots of people want to live there, and that is why it attracts so many renters. However, to decide on the value of an investment in any area, it is essential to observe the big picture alongside the small detail. Therefore, this guide aims to answer whether or not Covent Garden is a good property investment area from the perspective of the landlord.

Covent Garden is very attractive to tourists for its entertainment and amenities.

Covent Garden: A Profile

Covent Garden is arguably best known for its association with flower and produce markets, and in fact, there is still a large business focus here to this day. The market and its well-known status make this area a tourist hotspot, only bolstered by the presence of live street entertainment, a plethora of food and drink establishments, plus theatres and offices. In addition to the must-see market, there are a number of high-brow retail stores and general shopping opportunities as well. So, with all this going on, it tends to be one to see if you are visiting London, but what does this mean for landlords looking to go into property management in Covent Garden?

The rental market is well established in this zone. Current figures suggest an average rental per week rate of £1,300, therefore it is an area that will attract working professionals. For landlords, this is a benefit in a variety of ways. Tenants with a reliable salary are generally more attractive, and with a significantly high median rate, these properties demand renters with higher wages to cover costs. The initial cost of purchasing a property will be one of the higher rates found around London, with prices commonly over £1 million. This may be a deterrent, but given the popularity of the area, any investment has a fairly guaranteed high return rate.

Crime Rates

The crime rates in Covent Garden in terms of home invasions are relatively average. They are statistically lower than other areas of London, with the area being subject to more personal robbery than domestic and property. So, while the overall crime rate may be considered as high, this isn’t necessarily in relation to house robberies and therefore, landlords should factor this into their considerations. The best things to look for in an area’s crime rates for a potential property are:

  • The safety at night. Are the streets surrounding the property safe? The mugging statistics and sexual assault rates should give a clear answer to this query. If the streets seem dangerous, there is an increased risk tenants will be deterred from entering into a rental agreement and seek areas with lower criminal activity to live instead.

  • The burglary crime rates from local policing intelligence. How often houses get broken into will determine the likelihood of further robbery sprees occurring.

Property Prices

The property prices in Covent Garden are, like most prestigious London areas, relatively high. There are good points and bad points to this for landlords. Firstly, on the advantages side, higher property prices mean higher rent rates. For a tenant to secure a property they have to prove they can afford the rent in most cases. To do this, they will have to show proof of employment or income or similar. The rent rates in this area are more likely to attract working professionals which is usually a more attractive and reliable renting model for landlords.

So, while the initial investment may be more demanding, the return has bigger profit potential too. It is a matter of balancing the scales. Property in this area is priced that way for a reason — that reason being people want to live there. So, though nothing is ever certain, the chances of guaranteed rent through organic routes are highly boosted.

Local Amenities

Covent Garden has lots of tourist points of attraction, which has made it one of the most popular areas for vacationers, according to Upper Key. From the markets to the theatres and everything in between, people come to London for the sole purpose of visiting this area. The amenities are great and there is a lot to hold interest, and thanks to the high population at most hours of the day and night, the feeling of safety is greatly enhanced when, for example, nipping to the local shop or coming back from work alone. So, in this context, this area is great for potential landlord investments.

Many tourists come to London to visit this popular area.

Travel Links

It is a natural jump to assume that there are great travel links in the area, and there are. There are tube stations nearby, the most commonly used are the Covent Garden station itself and the nearby Leicester Square. Aside from the tube, there are also a good number of bus routes that run all over the city so there are options for commuters. The staple London taxi is ever present thanks to the large visitor numbers here, and there is always the option of walking or biking. This zone is close to local attractions and office hotspots which means there wouldn’t be the added turmoil of a lengthy commute if a tenant was to work elsewhere in the city. All of these factors make CG a viable option for landlords to consider, as there is a lot there to attract potential renters.

Being a Landlord in London: General Pros and Cons

Covent Garden is just one smaller area of the Greater City of London, arguably one of the most expensive places to rent in the whole country. Therefore, it is a big gamble to acquire property in this remit for landlords regardless of whether it is in Covent Garden or not. The answer is mainly yes, but it depends wholly on circumstantial factors. There are pros and cons, which this guide will now take a brief look at.

The Pros

Aside from the obvious fiscal potential yield and return, there are other pros that Covent Garden and other areas of London bring to the table for landlords.

  1. Lots of people want to live here for multiple reasons. People come from all over the world to live in London, and all over the country. This means there is a decreased risk of a property being left empty for any period of time, as new people will always want to occupy it.

  2. It is a multiple university city and therefore there will always be a demand for student rentals.

  3. It is a hub for business and commercial enterprises. People want to live here to be close to the place where they work.

  4. It is one of the country’s best places to experience authentic culture. This also opens up a whole other channel of work opportunities in theatre and the arts.

  5. There is a diverse range of ethnicities and a collaborative sense of pride in communities all over the city. Regardless of gender, race, or status, you can feel at home somewhere in London.

  6. There are fantastic transport links including buses, tubes, taxis and overground options too that connect the whole city together regardless of area. If you need to get somewhere, it will be achievable which makes the prospect of commuting more attractive and studying too.

The area has great transport connections for buses and tubes, as well as taxis.

The Cons

Of course, there are downsides too. Let’s take a look at the top few.

  1. The rent rates are climbing higher and higher in line with property prices. This makes it harder to obtain new mortgages and secure property at all, which is forcing landlords to look elsewhere for investment opportunities. It also means with the deficit between salaries and inflation, in times of potential recession such as now, renters are less likely to be able to uphold payment agreements and the risk of arrears becomes more relevant.

  2. It is a big city so there is a crime rate to contend with. Home invasions are not uncommon which can make properties feel unsafe and leave your asset at risk of damage or worse.

  3. The diversity is fantastic on multiple levels, but it can bring problems when it comes to referencing tenants in terms of suitability factors for a tenancy agreement. There may be additional language barriers to overcome, and the property may attract people who have never before rented in this country, meaning there is an additional risk factor to consider in this area too.

Covent Garden is one of the most lucrative areas of London in multiple areas, and rental properties are just one factor in the bigger picture. Landlords have a lot to gain by investing here and it feels like a solid investment worth making when the time is right to do so. There is bound to be a constant flow of viable candidates to take up a lease, and a higher standard generally in terms of actual structural considerations. Renting out property in any major city comes with a unique set of problems that need to be tackled head on, but that doesn’t mean it’s not worth looking into as an option at all.

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