Property agents Portico has forecasted that the cost of renting property in London is likely to increase in the coming months, as the balance between supply and demand increases in the capital.
Portico estimates that rising demand from the increasing population, coupled with unemployment levels, could put more pressure on rental values in the city. This could also push up yields for buy-to-let landlords.
Blow for tenants
This prediction will come as a blow for tenants who are already struggling to keep up with their rental payments. The monthly outlay for tenants in Greater London hit an average of £1,543 in October, according to the latest figures released from referencing firm Home Let.
Mark Lawrinson, regional sales director of Portico, noted: ‘The population is growing, the job market is buoyant and people are still coming to live in London-so while supply is decreasing, demand is continuing to grow.’[1]
‘It’s this imbalance between supply and demand that is likely to increase rental prices, while weaker transaction prices will push up rental yields’ he continued.[1]
Rents in London forecasted to increase as demand rises
Rising rents
Another report from Savills last month indicated that rents are set to increase considerably faster than house prices over the next five years. This report suggests that rents will rise by 19% by 2021, with house prices increasing by 13% over the same period.
In addition, the gap is predicted to be more pronounced in London, where rents are indicated to rise by 24.5%. House prices are forecasted to increase by 10.9%.
[1] https://www.landlordtoday.co.uk/breaking-news/2016/12/rents-in-london-set-to-rise-as-demand-for-homes-outstrips-supply