Residential rents in London will rise more than three times faster than house prices over the next five years, says a new report. It forecasts that tenants will have to pay 15.9 per cent more on average by 2023, compared with a rise of 4.5 per cent in values.
Economic uncertainty, the high level of deposits and stamp duty, caution among lenders and a constrained supply of new property will all contribute to the trend.
“The private rental sector will play a more important economic role than ever as it provides flexibility and value to renters and landlords alike,” says property expert John Goodall. “Amidst a volatile political and economic landscape, the hesitance of buyers and sellers to act is completely understandable.”
A new feature of the prime central London rental market is ‘Try before you buy’, where potential buyers rent a home to see whether they like it enough to buy. This development has been surprisingly popular with both buyers and sellers, bringing a new lease of life to a market which has languished in recent years.
New build-to-rent developments are also proving very popular across London, especially with young professionals and families, who enjoy their communal facilities and 24-hour management. These have been able to charge more than regular house conversions and are pushing up the average rental price in the capital.
Property commentator Ryan Prince believes the rental trend will continue to grow: “Young people in particular will re-think their approach to housing and taking on financial risks like a 95 per cent mortgage,” he says.