In the last 2 months or so I have been looking into buying a buy to let flat in Central London, focusing on South Kensington and Chelsea. My budget is 450K (mostly from mortgage, I put in 40K) and I find that with such budget it is almost impossible to find anything decent. Properties are going over the asking price. I find the market is very inflated due to the lack of supply. The rent from such property can't even cover the mortage, agent's fee and let alone the hefty service charge/sinking fund contribution. I like to know if I am investing in the right market and if it is the right time and the right thing to do? Any good advice/tips?

Stevie, I think you're being far too unrealistic. Rents in Central London (and certainly in South Ken/Chelsea/Mayfair haven't covered (interest only)mortgages for quite a few years... and I'm talking about 80% LTV mortgage, while you want over 90%. The area you're looking at is great and property can be let easily, but you will never ever cover your mortgage, much less letting agent's fees and service charges! And prices have still be going up quite a bit for the last 3 years, at least at the lower end of the market (sub 1 mil), so yields aren't getting any better.

Hi Alpha, I am not expecting any yield from rent, I want to wait for the capital growth in few years time. However I am not sure if property market in those areas at the moment is unrealistic? Any area in London that you would recommend?