Berryhill acquire and develop properties to provide housing for working professionals in London and the surrounding areas.

In London, the number of rented homes has just edged past the number that are owner-occupied, according to a report out this month. For the U.K.’s biggest city, this shift from owning to renting is, it seems, just the beginning. According to another new report, the ratio of renters to homeowners in London is expected to be yet greater by 2025, by which time the proportion of renters will have reached 60 percent.

This shift from ownership to shorter-term rental tenancies, one mirrored by trends in the largest North American cities, is likely to have a number of consequences. Being able to afford decent housing in London is liable to become even harder for the average person.

First off, we need to be clear about why this is happening, although to be fair the reasons for the shift to renting are so clear they’re probably visible from the moon. London housing simply isn’t affordable. The city’s population is rising fast. In February 2015 it surpassed its previous peak of 8.6 million, which it last reached in 1939. Housing construction has lagged far behind demand, with the proportion of homes built that are actually affordable also dropping.

The inevitable result is spiraling home prices. After a rise of 5.4 percent in January 2016 alone, the average home price for the city is now £643,843. The current median annual salary in London now stands at roughly £34,000. This mismatch makes buying a home impossible for most people.

Property investment example

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Property Area:
Bermondsey Se16

• 1.2 Miles to London Bridge

• 1.2 Miles to Shard

• 10 Minute train journey to Buckingham Palace

• 20 Minutes train journey to The British Museum

Property Value:
£400,000.00

Deposit:
£100,000.00

Fees and Legals:
£37,000

HMO Rooms:
4

Mortgage Value:
£300,000.00

Interest Only Rate 3%:
-£750.00 Per Month

Rental Income Per Room:
+£1,000.00 Per Month

Rental Income Per Household:
+£4,000.00 Per Month

Monthly Profit Gross:
£3,250.00

Yearly Profit Gross:
£39,000.00

Investment Yield Gross:
28.8%