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TODAY'S OTHER NEWS

Prime London lettings market back in the black says Savills

The prime London lettings market has returned to growth after three years of falling rents, according to new five-year forecasts from Savills.

The agency says prime London residential rents are forecast to rise by 10.9 per cent over the next five years, with a lower 6.7 per cent growth forecast across what Savills calls “the prime commuter belt.”  

Capital growth is expected to outpace rental growth over the next five years which will underpin landlord returns, it claims.

Rental values bottomed out in London in mid-2019 and recorded growth averaging 0.9 per cent across the full year, having fallen by an average of 7.7 per cent since the 2016 EU Referendum, and down 14.9 per cent in prime central London.     

Across prime central London, Savills says capital values are expected to rise by 20.5 per cent and across other prime London locations by 11.5 per cent.

And the agency says the three per cent additional homes stamp duty surcharge, introduced in April 2016, put pressure on the sales market and brought unsold stock into the lettings market.  

This has now largely been absorbed, it says, helped by the slowing of prime new build supply into the London market post-referendum. New build supply, including purpose built rental stock, may increase in the short term, but is not expected to limit rental growth over the longer term.

Looking at the wider UK rental landscape, Savills says that following changes to the taxation of landlords since 2016, 132,000 buy to let mortgages across the nation have been redeemed, contributing to a lack of supply in some parts of the prime rental market.

Over the past four years, international landlords have increased their share of the market from 27 per cent in 2016 to 35 per cent in 2019.  

The Boris Johnson government’s proposed additional three per cent stamp duty surcharge for non-UK resident buyers may limit new supply coming from this international group, warns Savills - and it may also deter part time London residents from buying a property, pushing further demand into the rental market.

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