Central London rents look set to increase by as much as 8% to 10% by the end of this year, putting huge pressure on their tenant’s finances, says a new report by property consultants in the UK.
The latest report from Cluttons’ Residential Property Forecasts says that the growing demand for rental properties in London is unlikely to be dampened, as households face decreasing income and lowered job security.
Record increases of 19.1% in London rental costs last year have already severely impacted tenants, who now face further increases as low consumer confidence and what’s been labeled the ‘mortgage famine’ fuel a growing demand for homes to rent in the UK capital.
Currently, low-budget homes in the £250 to £650 a week range are extremely sought after and in critically short supply, says the report, as struggling tenants attempt to tighten the purse strings. Because of this, rental values in this sector of the market are being put under considerable upward pressure.
Existing tenants at least, are finding things more bearable, with those renewing their tenancy contracts only being subjected to smaller rent increases of around 4%. It seems that some landlords who are worried about how the economy is going are prepared to accept lower rents in order to keep reliable tenants for the long term.
“The rental market in Central London is maintain its momentum this year, and rents are expected to grow yet again, although this growth will be less than what we saw in 2010,” said Lynn Hilton of Residential Lettings in London.
“Tenants are really beginning to hurt however, with many of them being forced to look for cheaper areas, outside of London, in which to live.”
“This growth is expected to slow down during 2012, though it will still stay above inflation for the foreseeable future.”