New figures show that rents in London have risen at their fastest rate for four years while the amount of properties available fell significantly in late 2018.
Rightmove’s latest Rental Trends Tracker covers Q4 – October to December – and reveals that rents in the capital rose by 2.1%, the fastest rise since Q1 in 2015. They predict that rents in London will rise by a further 4% this year, but a fall in supply of 22% compared to the end of 2017 is having repercussions on the market.
“The increasing rents in London reflect that demand has been exceeding supply over the past year,” commented Rightmove’s Commercial Director and Housing Market Analyst Miles Shipside.
“When the Government introduced higher stamp duty on second home purchases back in 2016, it deterred many landlords from investing in the buy-to-let market, which in turn has exacerbated this ongoing dearth of available properties, and we’re yet to see any significant boost in stock from the many build-to-rent programmes. In addition, the more punitive treatment of tax reliefs has meant some landlords are also exiting.”
London’s all-time high
Average rents in London now stand at a new high of £2,034, but on a national basis they fell by 0.6% to £798. The biggest quarterly rise around the country came in the north-east, which recorded an uplift of 5.5%, but the performance of five towns back across the Pennines in the north-west also caught the eye.
Ashton-Under-Lyne, Stalybridge, Oldham, Bootle and Winsford were the five most in-demand areas in the country outside London, while in the capital itself Camberwell, Kennington, Elephant & Castle, Biggin Hill and Chadwell Heath were the districts earning most interest.
“We forecast that average asking rents will continue to slowly strengthen further in 2019, by perhaps 3% outside London,” Mr Shipside adds. “In the capital there are no signs of an increase in buy-to-let activity, which may lead to asking rents growing further by around 4%.
“A mutually beneficial plan for both buy-to-let landlords and tenants is to strike up a genuine rapport. It eases landlords’ concerns if they have a tenant in situ for several years, while a tenant with a good relationship with their landlord will stand a better chance of negotiating more favourable rents.”
More stock required
The figures underline the need for more homes to satisfy some of the demand as people unable or unwilling to buy look to the rental scene. A report from CBRE recently found that 42,000 new rental homes are being built through institutional investment, with a further 64,000 in the pipeline. And Homelet have also warned that a further reduction in housing supply could see rents begin to rise above the rate of consumer inflation.
