Rental rates in London rise twice faster than the rest of the country
Inadequate supply of rental properties is jacking up prices in the capital city as it hits an all time high at £2,119 a month.
Rent in London is up at 4.2% from last year and 45% from ten years ago, according to Rightmove’s latest Rental Trends Tracker as compared to the rest of the country’s 2.4% yearly add on and 24% rise over the past decade.
The short supply of rental properties is causing the upsurge of prices and the shortage is caused by the absence of new landlords venturing into the private rental sector or property owners leaving the rental business. Another reason is overstaying tenants who’d rather stay with their current landlord fearing the worst if they venture with new ones.
From Rightmove’s commercial director and housing market analyst, Miles Shipside:,br>“We’ve seen a lack of rental properties coming to market in London over the last 18 months and that keeps feeding through into rising rents and another new record this quarter.,br>“Rents in the capital have risen at nearly twice the rate of the rest of Great Britain both over the last year and the last decade.,br>“New supply coming to market is constrained by a lack of new landlords, and existing tenants staying longer.
“Tenants are less likely to swap their existing rental for another as their other options on the open market are likely to be more expensive than sticking with their current landlord.”
The average asking rent outside London has risen to almost £160 a month for the past 10 years, whereas its £658 more per month in the capital city.
Shipside further adds:
“London, in particular, has some rent increase hotspots due to a shortage of stock with existing and new landlords deterred by the additional 3% stamp duty when buying rental investments.
“On top of London’s high purchase prices this is a substantial extra sum.
“The lack of reasonably priced choice and rising rents for London’s tenants looks set to continue
“At present, the only growth in supply is coming from the institutional build-to-rent sector.”
The ban on tenant fees may have also aggravated the situation. Landlords having to pay more may have pushed some to think twice and to venture into other income sources, or those in the market to look for other more lucrative schemes.
According to Kate Eales, national head of lettings at Savills:
“Over the past six months since the tenant fee ban, landlords are having to pay a bit more for letting services.
“This cost isn’t necessarily being passed onto tenants, but landlords are not entering the market in the same way that they were back in 2010
“This has resulted in a lack of rental stock, which in turn pushes rental prices up.
“In London, areas have changed dramatically in the past 10 years in terms of demographic and popularity.
“Brixton is such an example, previously up and coming, and now an area that’s seen landlords benefit from an increase in rental prices.”