Franchise letting agency giant Winkworth is warning that London’s tenants face higher rents as some landlords sell investment properties in the light of Chancellor George Osborne’s proposed buy to let tax changes.
In its annual prediction on the property market, Winkworth - which this week reported a profits warning based on lower than anticipated sales - says the lettings sector is becoming increasingly significant in the London-wide housing landscape.
“The private rental sector now represents 30 per cent of the London property market and we expect rentals to continue to grow in importance, with a shortage of supply underpinning prices” says the agency.
It anticipates growth of between three and four per cent in rents across Greater London rentals, slightly above wage inflation.
But it warns: “This will be supported by a reduction in supply as some landlords sell off secondary letting properties and consolidate their portfolios to offset the increased costs from the changes to tax allowances announced in the last Budget, as the buy-to-let sector remains on the government agenda affecting sentiment to invest.”
George Osborne has proposed sharp cuts to the mortgage interest tax relief for higher-earning landlords, and more restrictive wear and tear allowance payments.
Winkworth says that in prime central London, rental prices will continue to be affected by the decline in demand that has troubled the area for the past two years, as tenants look for better value for money in zone two and beyond.
“Indeed, Winkworth’s Corporate Services department has noticed a considerable number of searches in these locations rather than the usual request for a prime central London rental. As such, we anticipate that prices will plateau with zero per cent growth” it warns.