High demand for property to rent in London has caused rental prices to soar across the capital, particularly in primary locations, but prices could yet rise further.
The latest Knight Frank report shows that rents in prime central London increased by an average of 0.3 percent in July, taking the rise in the three months to July to 1%. Primary rents in the capital are now one percent higher than their previous peak in March 2008, due to a lack of rental accommodation in relation to soaring demand for rental homes, fuelled by greater demand among families and an influx of overseas nationals.
Tim Hyatt, head of residential lettings at Knight Frank, and president of ARLA, commented: "Rental demand continued to rise in July but stock levels are still constrained in certain areas. Rents have been boosted by the high levels of activity in the market as many families look to secure newer property before the start of the new school year in September."
"Like for like deals on this time last year are showing positive growth and we anticipate as ever the summer months being very busy for the London and Home Counties lettings offices."
The lack of homes to rent in Central London is expected to cause some ripple-out effect in other parts of the capital and possibly a little further afield.
This means an even greater volume of enquiries for homes to rent across the city, including property to rent in Richmond, property to rent in Wandsworth and property to rent in Parsons Green, among other locations.
With very few signs that rental demand is set to slow, rental prices are expected to grow.
A staggering 90 percent of landlords in London expect to see rents increase over the next 12 months, according to a poll of 500 private landlords/property investors conducted by the Young Group.
The property management specialists’ findings suggest that the London property market is now ripe for buy-to-let investors.
Research by national advisory firm Mortgages for Business revealed that average buy-to-let yields are continuing to grow on the back of flat property prices and soaring rents.
Figures provided by the firm show that the average rental return has increased to 5.8 percent, which is higher than many buy-to-let mortgage borrowing rates, thanks to a 35 percent increase in the number of buy-to-let mortgage products available.
David Whittaker, managing director of Mortgages for Business, said: "Languishing property prices and rising rents have created a perfect storm for professional investors and landlords."
"The yields on offer on investment properties are incredibly lucrative and with the owner-occupier market unlikely to change dramatically over the next 18 months the returns for investors will be healthy for some time to come."
Marsh & Parsons are one of many leading estate agents in the capital that have reported a higher level of enquiries for property to rent in London, partly because of rising London property prices, which is making the prospect of buying property in the capital increasingly unaffordable, forcing more people into rental accommodation instead.
The company said on its website that the usual seasonal increase in the number of tenants looking for property in summer has been ‘further fuelled by the would-be buyers who are being forced to rent, either due to being unable to secure financing or because they are struggling with the lack of choice on the sales market’.
Source: Marsh and Parsons London Estate Agents – Property to Rent in Stockwell
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