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London Rental Prices Higher Than Ever

8 days ago
London Rental Prices Higher Than Ever

The surge in London rental prices and unprecedented demand for housing has created the perfect time to invest in the London property market. The massive demand for renting in London is due to high house prices and a return to the office for many workers. These conditions combine to put landlords in a commanding position. It also means that the time to invest in buy-to-let property has significantly improved in the last few years.

Competition for properties drives up the prices

Two factors have fuelled the demand for rental accommodation in London. First, there is limited stock in the nation’s capital for rented housing. Simply put – there are not enough rental houses and flats to meet demand. Second, an influx of workers back to the city means fierce competition to rent.

Many letting agencies in the capital say it’s not uncommon to have around 30 viewings for a single property. Some renters are willing to bid blind on a property without viewing it.

Paul Cheshire, professor of economic geography at the London School of Economics and Political Science (LSE), explains the demand for rented housing. He said, “Before the Second World War, in that decade we built over 60,000 houses a year in what is now the Greater London Authority area. In the most recent decade, we built about 24,000 houses a year. London’s rental market is essentially the problem of London housing – we just don’t have enough of it”.

Index of private housing rental prices data review.

The growth in private rental prices means the amount London tenants are willing to pay to landlords has surged in the 12 months to July 2022.

The Office for National Statistics reports that London has experienced the strongest rental price growth since 2016. London private rental prices increased by 2.5% in the 12 months to August 2022, up from an increase of 2.1% in July 2022. This is the strongest annual growth in London since October 2016.

What does it mean to Landlords?

Record high rental yields mean that investing in a buy-to-let in London is an excellent choice. According to the Guardian, average rental prices in London are 16.1% higher than 12 months ago. This is the highest rate of growth anywhere in the UK. As a result, the average monthly rent in London is now £2,343.

Landlords are in the ideal position because demand is considerably outstripping supply. For example, demand for renting is up to 20% on last year. However, studio flats are the most in-demand type of housing renters want. This is because they are struggling with increased energy costs and the cost-of-living crisis.

What does it mean to Tenants?

Demand outstripping supply gives landlords an advantage over tenants when letting apartments. Tenants are no longer able to negotiate cheaper rental deals. Instead, many are willing to pay way above the asking price to secure the lease.

According to data, the demand for studio apartments is up by 71%. Landlords also report that where they usually get five to 10 inquiries, they are now getting up to 40 in a 48-hour period.

Is it a good time to invest in buy-to-let properties in London?

Data on the rental market in London show that now is the best time to invest in a buy-to-let property. Demand continues to outstrip supply, and there is no sign a slowdown is expected anytime soon. Therefore, your property investment has tremendous potential to enjoy high rental yields.

Thinking of expanding your property portfolio?

If you’re considering adding a Willesden Green property to your portfolio, do not hesitate to contact our expert Lettings Agent team today. We have over 25 years of experience helping Landlords find a high return on investment in buy-to-rent property in the area. Visit our Houses in Multiple Occupation case study page to find out more about how the Regal team can maximise the rental yields for any investor.

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