The struggling London sales market is provoking a boom in the capital’s rental sector according to data from Benham & Reeves Residential Lettings.
It says Prime Central London saw strong gains in the last quarter after several quarters of stagnation. Many of the tenants are overseas professionals who are opting to rent long term as the cost of renting often represents a saving compared to purchasing a home in high value areas thanks to the 12 per cent top rate of stamp duty.
The rental market in east London is also very strong but for different reasons.
The tenant demographic is typically younger and more likely to be British. However, many of these tenants are deliberately choosing to rent rather than own as a lifestyle choice.
BRRL says many of what it calls ‘the Millennial Generation’ do not view ownership as a goal and recognise they can often rent a better property than they can buy. Millennials are also a more mobile workforce who change jobs more frequently than previous generations.
North London was one of the few areas to see rental values fall.
A number of new developments in north London have seen the property supply increase. Locations on the Northern Underground Line have also fallen as the Central Line interchange at Tottenham Court Road has been suspended for several months while the station is rebuilt for Crossrail.
“From an investors’ perspective, it is very interesting to observe demographic changes. One of the reasons the rental market tends to remain so strong in areas such as east London is because these areas attract Millennials who are content to rent long term” says Marc von Grundherr, BRRL’s lettings director.