Fresh research by Savills shows that rents in London, particularly in primary areas, have been rising ahead of inflation for at least the past 18 months. Rents are stood at an average of four per cent higher than at their 2007 peak, with genuine signs that they will continue rising, due to increasing demand.
"A number of different factors are now driving the market," said Yolande Barnes, Head of Savills Residential Research. "A boost in demand from international and corporate tenants is driving values in central locations, but rental growth is underpinned by strong and growing demand from would-be buyers unable to access home ownership. Constrained stock levels are creating competition and an upward pressure on rents."
No matter where in London, whether it is a property to rent in Balham, a property to rent in Brook Green or a property to rent in Clapham, demand is significantly outstripping supply.
Consequently, Savills forecast that rents in London will grow by up to seven per =cent over the whole of 2011, which explains why more landlords are now actively adding to their property portfolios.
Research by buy-to-let mortgage specialist Paragon supports the claim that rents in London are rising on the back of higher demand, with almost a third of landlords – 29 percent of respondents – admitting that their rental income had increased during the second quarter of 2011, compared to the previous quarter.
Nigel Terrington, Paragon Group's Chief Executive, commented: "Results from our latest research shows that rental income has increased steadily during the second quarter. Landlords are continuing to experience high levels of demand for their properties so have been able to make small increases to rent levels, without making accommodation unaffordable."
Property consultants Knight Frank believe that the growing influx of foreigners, particularly Europeans, moving into the capital is the main cause for the recent rise in rental values, with research by the company revealing that European tenants alone, secured 30.4 percent of all new lets in Central London during the first five months of this year, up from 25 percent during the same period in 2010.
Liam Bailey, Knight Frank's Head of Residential Research, said: "European demand has been a constant feature of the central London lettings market, with French, Italian and German tenants taking substantial shares of lettings."
Another key driver for the recent growth in rental demand has been the rise in demand from corporate tenants.
Leading lettings agents Marsh & Parsons report that the corporate lettings market in particular is continuing to show signs of resurgence as more and more companies seek prime rental properties to attract and relocate senior staff to London.
A passage from a recent article by Marsh & Parsons said: Such strong competition across the lettings market amongst tenants has meant that an increasing number are looking to 'lock-in' for longer tenancies to give them security as rents, in some areas, soar.
"For landlords these long tenancies are also highly attractive, offering security of tenure to minimise expensive void periods. With many Londoners either being forced or choosing to stay in rental property long-term, perhaps we are seeing a shift towards the direction of our European counterparts, for whom long-term renting is, for many people, a permanent choice."
As tight mortgage lending conditions for buy-to-let investors start to show signs of improving, it seems that the buy-to-let market in London is back in vogue, as more shrewd property investors take advantage of the booming rental market.
Source: Marsh and Parsons – London Estate Agent - Property to Rent in London
No comments:
Post a Comment