London rents 'look healthy for the next five years'

by Daniel Jones

Residential landlords seeking to increase the number of tenancy agreements they make are currently in a favourable position, according to a property consultancy, as the returns they can expect to see from their tenants look set to keep rising for at least the next half-decade.

Gary Hall, partner at Knight Frank, said there has been a "big jump" in rental values in London since 2009, with the consultancy's own research showing figures of a 27 per cent increase in residential rates since this time.

Currently, values stand at a comparable position to the peak of the market prior to the financial crisis, suggesting that landlords may find now is a good time to strike more tenancy agreements.

Mr Hall went on to say that the industry predicts a steady growth over the next five years, with four per cent growth expected for 2012 and five per cent for the subsequent four years.

"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 went on to say.

"We've got a big issue in the bottom end and middle-market, where there is just a lack of stock - there are hardly any properties on the market and the number of tenants coming to London from Europe and Asia is continuing to increase."

Next year's Olympic games look set to shake up London's rental market, however, and some landlords may decide to finish their tenancy agreements with some tenants to make room for short-term lets, as thousands of overseas visitors flood in to the capital.

Recently, the Association of Residential Letting Agents (ARLA) said the private rented sector is "reaching its limits", with the number of agents reporting more tenants than properties reaching its highest ever level.

"For tenants, this means that there is often huge competition for every property and it is therefore vital that consumers take steps to ensure they are able to find a property that fits their needs," said ARLA operations manager Ian Potter.

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Published on: November 3, 2011

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