When Will London Rents Finally Peak?

There have been significant increases in London rents over the past two years, with Knight Frank figures indicating that since 2009, the price of renting a home in the capital has increased by 27 per cent....

There have been significant increases in London rents over the past two years, with Knight Frank figures indicating that since 2009, the price of renting a home in the capital has increased by 27 per cent. According to Gary Hall, partner at the organisation, these rises are showing no signs of abating. "It's looking pretty healthy as a landlord - the rental market will continue to grow and the rental prices are going to head up," he stated. Mr Hall explained that a lack of new properties coming on to the market is likely to help boost rents further, particularly at the middle and bottom ends of the sector.

He also suggested that the Olympic Games in 2012 could affect the rental sector in different ways, noting that some landlords may terminate long-term contracts in favour of the money they can generate through short-term lets during the sporting event. If this happens, "there could be a flood of new properties coming on once the Olympics finish in September", Mr Hall added. Last month, Liam Bailey, head of research at Knight Frank, predicted that rental growth in London will begin to slow by the end of 2011.

Mr Bailey commented that there remains "scope for future ongoing rental growth", although estimated that more moderate rises of between four and five per cent per year are more likely in the medium to long term. Mr Hall agreed with this assessment, noting that steady growth is anticipated, with "a bit of a conservative figure" throughout the coming 12 months. He added that an increase of five per cent annually is probable until 2015. With rents in London now above their pre-recession levels and price rises showing no sign of stopping, investors may be attracted to the city by the prospect of healthy returns on residential real estate assets.
 

- Friday 04 November 2011

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