Underlining the last quarter’s unexpected turnaround, the London rental market saw values increase by 4% across most of central and eastern parts of the capital.
According to a report by Benham & Reeves Residential Lettings, the substantial impact of stamp duty rates has led to a stronger rental market.
The Prime Central London market saw increases in the last quarter, on the heels of many months of stagnation. This growth has continued into the present quarter. Many of the tenants aiding the growth are overseas professionals, opting to rent long term. This is due to the cost of renting representing a survey in comparison to purchasing a home in high value region, as a result of the 12% top rate of stamp duty.
In the east of the capital, the rental market is strong, but for different reasons. Typically, renters in this area are likely to be British and of a younger age. Many of these tenants are choosing to rent as a lifestyle choice.
North London actually saw a fall in rental values during the last quarter. However, a number of proposed developments in the area have led to an increase in property supply.
London rental market is stabilising
Marc von Grundherr, lettings director at Benham & Reeves Residential Lettings, commented, ‘from an investors’ perspective, it is very interesting to observe demographic changes.’ He feels, ‘one of the reasons the rental market tends to remain so strong in areas such as east London is because these areas attract Milennials who are continue to rent long term.’
‘They’re simply not willing to scrimp and save for years to afford a deposit but prefer to ‘live for the moment’. This concept even extends to where they choose to rent: they’d much rather live somewhere central close to good bars and restaurants than commute in from more affordable areas. For as long as East London remains hip and trendy, it will continue to attract good quality tenants,’ Grundherr concluded.