Fewer employment vacancies in London's financial sector and tenants seeking lower living costs have combined to push rents down in January. According to data published by Knight Frank, the average monthly charge for leasing a home in the UK's capital fell by 0.2 per cent last month, bringing them 0.6 per cent under their peak experienced in September 2011. However, the firm pointed out that the cost of renting in London remains around seven per cent higher now than it was a year earlier.
Head of residential research at Knight Frank Liam Bailey explained many tenants who work in the banking sector are facing much lower bonuses this year, as well as the prospect of job losses. Meanwhile, workers who have relocated are typically being offered 15 per cent less as a rental budget than they were at the beginning of 2010. "Activity has been strongest at the lower end of the market and, to a lesser extent, the top end. The sub-£1,000 per week bracket has seen more demand recently as people have been tightening their budgets, with both individual tenants and companies housing corporate tenants," Mr Bailey observed.
Looking ahead, he advised those with residential property investments in London not to expect further substantial rental increases, as affordability has become a key issue for those living in the city. Last month, Cluttons noted rents in the capital fell by 0.4 per cent during the final quarter of 2011 and predicted there would be a further correction in the market into the spring of 2012. Lynn Hilton, partner at the firm, explained the reduction was necessary to help the sector return to "a more stable level". The organisation also pointed out landlords are prepared to be more flexible in order to retain good tenants and reduce the risk of experiencing expensive void periods in their properties.
- Wednesday 15 February 2012