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Insight & Opinion

London prime rental prices on the rise

Author: Gemma





The cost of renting a property in London’s prime markets has seen a slight increase in the first quarter of 2014, a new report has revealed.

According to international property consultants Savills, there was a modest 0.1 per cent increase in the top-end of the market. While this might not seem too remarkable, its worth taking into account that the same quarter in 2013 saw a small fall, indicating the market is picking up in the UK capital.

Furthermore, small percentage increases in London offer larger returns on rent than other regions in the country, as the monthly cost of accommodation is much higher than elsewhere.

Savills did reveal that rents are 0.5 per cent lower than they were in the same quarter in 2013, but that this is not down to low levels of demand.

In fact, the experts said the popularity of the private rented sector continues to increase. There is still a pressing need for more properties in London, as more people turn to renting as an alternative to a first-time buy.

The report showed the East of City market saw the strongest rental growth over quarter one 2014, suggesting a lucrative area for investment.

Lucian Cook, director of residential research at Savills, noted that companies are increasingly looking to relocate the families of valued staff to London, making properties in the city even more popular.

However, he went on to say: “Demand for flats has been strongest from sharers and young professionals in the core and mid-market bracket due to hurdles to home ownership.”

The report did reveal though that rental growth in commuter areas have outperformed the prime market in London over the course of the year, with overseas tenants making up 37 per cent of the tenancies in prime and high value areas during 2013.

Mr Cook said: “Demand from this group has been supplemented by domestic households who are renting before committing to a house purchase.”

“Properties that are within a town centre, close to local amenities such as schools and stations, remain more popular than rural locations. With this trend towards prime urban living also being seen in the strengthening prime regional sales market, rental stock is being put under pressure as some short term landlords take advantage of the increasing prices for prime property outside London.”

Savills continued to state that expectations for the future state that rental growth across all residential markets should remain strong, as homeownership continues to be an issue for many families and young workers in the capital.

This presents an opportunity for investors to make the most of their hard-earned cash by investing in an income generating asset such as residential property.

With the cost of rent set to continue to rise and demand to remain strong, investors can be secure that their property will bring in a healthy revenue while the value of the house or flat rises too.

If properties in London and commuter areas are out of your investment budget, take a look at other residential opportunities throughout the country, The regional markets are on the up and provide a welcome return on investment at a lower initial cost.


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