According to Home.co.uk during London’s recent property boom house prices soared ahead of rents. Investment fever drove prices up more than 50% in just 5 years, where rents only rose by 10% causing yields to collapse; however, over the last year prices have fallen by around 2.3% and rents jumped by 4.3%. Although there are still some prime central London locations feeling the pressure of decreasing rents, many pockets of London have seen considerable growth in rents as well as rental yields, bringing a smile to many landlords and buy-to-let investors!
Emma How, Director of Sales & Lettings gives us her insight …
“Comparing our data from Q3 2017 and Q3 2018, we have seen tenant enquiries increase by around 24%. We believe this increase in demand is due to the fall in supply because of tax changes (tax relief, loss of wear and tear allowance and 3% stamp duty levy), and landlords deciding to leave the market. In addition, increased activity in the commercial market has tempted some of our landlords with larger portfolios to consider converting blocks of residential flats into commercial offices.
Demand from international tenants remains strong from both students and professionals. Demand from professional tenants who were previously looking to buy has increased, while we wait to see what deal will be agreed when we leave the EU. This has also meant tenants are staying longer than 12 months.
Properties that are in good condition, well designed and stylish and have good amenities are being rented out quickly and at a premium as more and more tenants buy into the ‘lifestyle factor’.
We feel the private rented sector is a good place to be and with less stock available, it could drive rents up. As ever, it is important for landlords to be flexible and competitive. We believe that rentals will remain strong for the next six months as Brexit approaches.”.