Fears are growing that unaffordability is spilling out of the capital and into the Home Counties, following the publication of a report from estate agent Knight Frank.
Data from the report indicates that the cost of renting in these regions has increased by 5.4% during the first half of 2015. This is largely down to a surge in international tenants and a number of companies relocating employees to regions on the capital’s commuter belt.
Tenancies
The report found that corporate tenants made up 47% of rental agreements in Berkshire, Buckinghamshire, Hertfordshire, Kent, Surrey and Sussex during the second quarter of the year. This was up substantially from the 27% recorded in the same period one year ago and marks greater confidence in the economy.
However, soaring rental costs in the South East of England have heightened concern that the sky-high rents currently being paid in the capital are seeping into nearby regions. As a result, even more young, would-be buyers are being priced out of the market.
Increases
Rental increases in the Home Counties grew at a faster rate than the luxury London market, which grew by 1.7% in the six months to June.
Oliver Knight, researcher at Knight Frank, feels the corporate demand in the region has come from a range of industries, including oil, technology and pharmaceuticals. ‘There is anecdotal evidence to suggest that corporations are also stepping up their budgets which has translated into more competitions for larger properties,’ Knight stated.[1]
This observation was echoed by letting agent Mark Tunstall, who confirmed that two US investment banks based in the capital had said that relocations will be plentiful during the summer months.
Foreign Forays
Knight Frank’s report also revealed that almost half of tenants looking for a property in the Home Counties during April and June were from overseas, with the majority from North America.
Head of lettings at Knight Frank in Ascot, Gordon Hood, stated, ‘the growth in the market has been fuelled by strong demand from overseas tenants. Over the last 12 months we have seen an increase in tenants from abroad relocating to prime rental markets in the Home Counties. In this time I’ve let properties to international tenants from America, South America. Canada, South Africa, France, Russia and Australia.’[2]
With property prices and rents hitting record levels in London and showing no sign of slowing, rental increases being recorded in the Home Counties are sure to add to concern that the capital’s commuter belt is no longer a viable option for those looking for a more-affordable alternative.
[1] http://www.telegraph.co.uk/finance/property/11719246/Rip-off-rents-hit-the-Home-Counties-as-unaffordability-contagion-spreads-out-of-London.html