Buy-to-let: where should you buy?

The buy-to-let market is enjoying a renaissance on the back of record demand for rented homes. So, if you have given up on the pitifully low saving rates offered by the banks and are wary of precarious stock prices, then putting money into the property market long-term may make sense.

But do your sums first

Can you cover the overheads and "void" periods when the property lies empty? If you think the figures add up, where should you buy — in a superprime postcode, a regeneration zone, or a nice safe suburb? Here are some suggestions with rents shown as monthly rates.

Archway

Not the prettiest place on earth but an easy commute to the West End and within walking distance of Hampstead Heath and charming Highgate Village. Islington council has pledged £2 million to clean up the area, improve its shopping centre and sort out the grim gyratory system.
Average price of a flat: £536,717
Average price of a terrace house: £924,069
Average rent (two-bedroom flat): £1,794
Average rent (four-bedroom house): £3,675

Chiswick

What's not to like about Chiswick? Its busy high street and huge choice of brasseries and cafés make it a lifestyle winner. It's not cheap and the commute to the West End is slow but families love it, so investing in a house rather than a flat might be wise.
Average price (flat): £379,508
Average price (terrace house): £742,272
Average rent (flat): £2,063
Average rent (house): £3,848

Honor Oak Park

One of those leafy suburbs that has inexplicably flown under the radar, even though it has just acquired a Tube link thanks to the extension of the East London line. Houses are affordable (by London standards), though capital growth might be slow-burn thanks to the area's low profile.
Average price (flat): £212,283
Average price (terrace house): £351,408
Average rent (flat): £1,153
Average rent (house): £3,250

Marylebone

Its good enough for Madonna and Marylebone is an excellent choice for landlords with deep pockets looking for top-end tenants. This is one of the more affordable pockets of prime central London and chances for capital growth are strong.
Average price (flat): £889,145
Average price (terrace house): £1.85 million
Average rent (flat): £4,014
Average rent (house): £6,942

Southfields

Cheaper than neighbouring Wimbledon and Putney, but still a classic suburb with good Edwardian stock. This is a safe investment that won't see dramatic capital growth but will remain popular with renters thanks to its leafy feel.
Average price (flat): £345,186.
Average price (terrace house): £642,212
Average rent (two-bedroom flat): £1,794
Average rent (four-bedroom house): £3,675

Stratford

Superficially a no-brainer, but its current extortionate rental rates come ahead of the Olympics and are likely to subside later. However the Games legacy, coupled with superb transport links, will keep Stratford on the rental radar for young City workers.
Average price (flat): £205,353
Average price (terrace house): £239,872
Average rent (two-bedroom flat): £3,098.
Average rent (four-bedroom house): £6,816

Wembley

The focus for regeneration, the final phase of which is St Modwen's £90 million Wembley Central scheme — a hotel, shopping complex and improvements to Wembley Central Tube — due to start in 2012.
Average price (flat): £197,459
Average price (house): £288,770
Average rent (two-bedroom flat): £1,270
Average rent (four-bedroom house): £1,959

West Ealing

When Crossrail fires up in 2018 West Ealing will get a rapid, convenient link to central London. At present the Uxbridge Road is a pretty dreary high street, and some of the property is rather tired, but a wise investor who is in it for the long term should consider this an area ripe to up-and-come.
Average price (flat): £246,098
Average price (terrace house): £456,943
Average rent (two-bedroom flat): £1,590
Average rent (four-bedroom house): £2,271