London Property Services Rentals Sales

Capital growth

Capital growth is the motivating factor for most residential investors, and though there may be growth in the first three years, the net benefit is usually unspectacular as it is offset by the initial buying and running costs of the property and the likely cost of sale. Residential investment is therefore generally viewed as a long-term venture, although in a rising market some higher risk investors buy with the prospect of seeing accelerated short-term capital growth. The following points are worthy of consideration when evaluating the potential for capital growth including:

Anticipated future course of the market
The investor should experience accelerated capital growth in recovery situation; the London market has had three property slumps since 1969 but on each occasion it has recovered and reached a new peak
The higher the percentage of the loan, the greater the emphasis should be on securing capital growth rather than income.
Capital growth may be seriously affected by the long term prospects of an area, local plans and planning applications which have been submitted or approved should, therefore, be carefully examined.

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