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London rents rise for first time in six months

Tuesday, May 22, 2012

Prime London rents rose for the first time in six months in April, according to Knight Frank.

The Prime Central Rental Index showed that rates edged up by 0.1 per cent last month following a total of 0.8 per cent decreases in the previous six months. Compared to the same month in 2011, rents have now climbed in the UK capital by 1.2 per cent.

But landlords "should not expect a rapid rise in rents in the next few months", Head of Residential Research Liam Bailey warns, "as demand is currently failing to keep pace with supply."

Although new property instructions were up 56%, and new tenancy starts were up 40%, in the three months to April compared to the same period in 2011, new tenant registrations were up by just 5% and property viewings up by 15%, the report adds.

Further confirmation of this gap comes in the form of the ratio of new applicants to new instructions, which last year stood at 4.3 and this year, to date, stands at just 2.9.

This lull has been attributed to the London employment market and limited personal and corporate budgets, while the strong sales market means that some are now choosing to buy rather than rent.

Within the prime market, performances vary, with Belgravia rates jumping by 1.2 per cent and Hyde Park rents dipping 0.9 per cent. While some two- or three-bedroom houses in the £1,700 to £1,800 per week price range in Knightsbridge, for example, are failing to attract attention, properties in certain developments in the area are proving quite the opposite and achieving good rents.

Knight Frank continues to predict a modest growth in rents (1%) in 2012, before a more sustained recovery in 2013.

 

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