More people are forced to rent property in London, instead of purchase, their home, because many would-be purchasers have been priced out of the housing market due to the recent credit crisis.
Paul Hackett, the Smith Institute's director, comments: "There is every reason to believe that home ownership levels will continue to decline and the private rented sector will continue to grow. An increasingly large proportion of households will in effect be excluded from the benefits of home ownership."
London's letting agents generally agree that demand for prime rental properties in the capital is growing, with greater demand for property to rent in Notting Hill and Kensington, among other sought after locations.
"The wider London rental market has been heating up for some time," said Peter Rollings, CEO of leading lettings agent Marsh & Parsons. "[Tenants] are still being drawn to areas like Kensington and Notting Hill to enjoy the kudos of living in such an exclusive postcode."
The number of mortgages issued for home purchases fell by over 50% between 2007 and 2010, due mainly to stringent mortgage lending conditions, research by Smith Institute shows.
Consequently demand for property to rent in Bayswater and property to rent in Holland Park, amongst other primary destinations in the capital, have soared, pushing rental prices higher.
A recent Halifax study suggested that Britain will become 'a nation of renters within a generation' unless more new homes are delivered.
The survey suggests that almost two-thirds of people without their own home believe they have little chance of getting a foot on the housing ladder, due to a lack of mortgage finance and rising property prices.
Almost half of people aged between 20 and 45 admitted they thought the country was becoming more like Europe, in which renting was considered the norm.
Richard Sexton, director of e.surv chartered surveyors, says that until more people qualify for mortgage finance the lowest end of the property market will remain subdued, and the rental market will continue to enjoy an Indian summer.
A recent Halifax study suggested that Britain will become 'a nation of renters within a generation' unless more new homes are delivered.
The survey suggests that almost two-thirds of people without their own home believe they have little chance of getting a foot on the housing ladder, due to a lack of mortgage finance and rising property prices.
Almost half of people aged between 20 and 45 admitted they thought the country was becoming more like Europe, in which renting was considered the norm.
Richard Sexton, director of e.surv chartered surveyors, says that until more people qualify for mortgage finance the lowest end of the property market will remain subdued, and the rental market will continue to enjoy an Indian summer.
He commented: "The London rental market is in hyperdrive because of the lack of appropriate mortgage products for lower income buyers. Loan-to-value's over 75% accounted for less than one-third of all house purchases in May, compared to over two-thirds in May 2007, because less well off borrowers simply cannot piece together the large deposits demanded by lenders. The trend is reflected in the profile of property transactions."
He added: "This inability to get a mortgage and get a foot on the property ladder has built up a backlog of first time buyers who are marooned in the rental market. That in turn has driven rents and those high rents are making buy-to-let investment very attractive."
Adam Feather of London-based estate agents Robert Anthony says that rental demand is generally greatest for homes in primary postcodes, ensuring high demand for rental property in Mayfair, Chelsea and Fulham, among others.
Feather also points out that properties in Maida Vale, Little Venice and Westminster, generally spend little time on the rental market due to a high number of applicants looking to rent in these areas.
Source : Marsh & Parsons - Property to Rent in London
