A study for the Property Investor Show, which was recently held in London, has established that many first-time buyers who are unable to afford homes in the metropolis are purchasing one elsewhere in the country and letting it out while themselves renting in the capital.

First-time buyer Luke O’Neill rents in London while owning a house in the Suffolk town of Bury St Edmunds that he bought for £155,000. Explaining how he lets this property out on a buy-to-let basis, O’Neill said: “The rental yield for the property is 5% and the monthly rent goes towards the mortgage on the house and it also leaves me with a little extra.”

He said this profit would go towards a mortgage deposit when he finally gets round to buying his “dream” London home.

Nick Clark, Property Investor Show, managing director, said this kind of investment is a good way for people to get on the ladder before prices begin to rise again. The Department for Communities and Local Government’s figures revealed that the average London house price in July this year was £343,182, whereas the overall English average was £224,207.