Residential rental prices have continued to climb to record highs across almost every borough as the London rental market experiences greater demand.
In what has traditionally been a home-owning market, there has been an undoubtable shift towards rentals, particularly in the London rental market, as property prices have become largely unaffordable when compared to the average income of households. Indeed, renting can enable some tenants to afford better properties in better neighbourhoods than if they were to buy a house and get a mortgage.
“George Osborne has done more for the rental market than any other Chancellor…”
The Lettings Director of Benhams & Reeves claimed that “George Osborne has done more for the rental market than any other chancellor in history. Thanks to the changes in stamp duty rates, he has made renting a more attractive option for many tenants.”
A report from the residential lettings firm found that the London rental market is predicted to continue to rise. This is largely to be result of reduced competition and supply, as amateur landlords ae predicted to exit the market due to increased costs from the impending stamp duty increase. Furthermore, the report used figures from 2015 to illustrate that in 2015 almost every borough in zones 1 and 2 saw price increases by more than 4%. Even outlying boroughs, such as Barnet and Ilford, saw significant growth, albeit modest in comparison to the city centre boroughs.
The recently gentrified areas of East London have seen some of the biggest increases in rental values across 2015. Hackney experienced a rental value increase of 33% in the year, while Bow, Bethnal Green and Haringey all experienced double-digit growth.
“London’s private-sector rent costs have risen from 49% to 62% of pre-tax income…”
However, many Londoners are finding it increasingly difficult to afford the rising rental costs. London’s private-sector rent costs have risen from 49% to 62% of average pre-tax income since 2010. Indeed, London has been at the forefront of this, with London rentals 106% higher than the rest of the UK. Caroline Lucas, the Green MP, suggested that MPs should investigate whether a living rent commission should oversee the costs of renting in relation to the balance between landlords’ costs and rent levels. This proposition has both positives and negatives. Although Arthur supports the idea that exploitation of tenants should be avoided, the economic reality of this proposition is extremely arguable.
Arthur believes that the UK and London rental markets will continue to grow throughout 2016. This is a result of deep economic and systemic changes over the past decade. As more people seek rent, landlords should seek to improve their property management system in order to streamline and optimise their communication with tenants. 2016 holds a lot of potential for the rental market and Arthur can help landlords release it.
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