The London prime rental market is starting to cool after a year of record breaking growth with rents either plateauing or seeing slight growth for a third quarter in a row.
The latest data report from Benham & Reeves Residential Lettings reveals that this follows a frenzied 2015 which saw unprecedented growth for the first two quarters before finally slowing as the market paused to absorb the changes.
Many parts of prime central London saw rents fall, reflecting a trend which has seen demand increase in the inner suburbs, according to the report.
It explains that as demand from wealthy non-nationals wanes in the run up to the referendum in June on the UK’s future in the European Union and currency controls put in place by foreign governments, the demand for luxury property in Belgravia, Knightsbridge, Chelsea and surrounding areas seems to have peaked.
However, it is still anticipated that the fall in Sterling’s value will make prime central London more attractive over the coming months so this decline is likely to be temporary.
Rental growth in the inner suburbs continues as the domestic market gains further confidence. Wandsworth saw strong growth as did most of the trendy parts of east London. There is also demand for rental properties in Notting Hill, Bayswater, Queen’s Park and Kensal Rise where larger homes offer comparative value.
North London, particularly Colindale, Golders Green and Hampstead Garden Suburb that have seen the most substantial growth. This was widely anticipated as rental growth had been supressed in recent quarters while Crossrail works closed the Northern Line interchange at Tottenham Court Road. With the station now fully open, rental demand in these areas has seen a resurgence, the report points out.
‘This is a much needed pause for breath after such huge gains in rental values. Unfortunately for tenants, this pause may only be temporary,’ said Marc von Grundherr of Benham & Reeves Residential Lettings.
‘With increasing restrictions on buy to let, more amateur landlords will be exiting the market, leading to a drop in supply in the face of a growing population. Over the long term, rents will inevitably go up,’ he added.
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