According to new data from the Government's English Housing Survey, the number of private tenants in London has outnumbered homeowners for the first time, with around 898,000 households now paying rent. By comparison 883,000 householders live in mortgaged homes, down 17% from ten years ago.
Although it might be expected that this shift in the balance between private ownership and lettings would push up the cost of renting London property, a quarter of London-based letting agents have actually observed rents going down in price over recent months. Even the Association of Residential Lettings Agents (ARLA) has confirmed in its February 2017 Private Rental Sector report that some tenants are now enjoying cheaper rents.
ARLA’s letting agents have reported rent rises of just 8% in London, compared to 25% nationally, and this is mainly due to a rise in the number of rental properties currently on the market. The increase is attributed to two key factors: investors snapping up buy-to-let properties last spring, before higher stamp duty rates were introduced, and owners deciding to let their properties rather than sell them, because of the climate of uncertainty created by the Brexit vote.
While tenants are currently spoiled for choice when deciding on their next rental property, it’s unclear how long this situation will last. Landlords are now subject to more stringent affordability checks for BTL mortgages and are also feeling the effects of the withdrawal of tax relief on mortgage interest, and this has led many pundits to predict a future slowdown in the buy-to-let market. Others have claimed, however, that low interest rates on savings will continue to encourage investment in BTL properties.
Opinion amongst property experts on the prospects for rents in 2017 (and beyond) is divided. Most commentators across the UK think tenants will see rent increases of between 2% and 3% in 2017, but in the longer term they believe it is inevitable that rents will rise more steeply. Despite the current fall in rental prices, the Royal Institution of Chartered Surveyors has recently predicted that over the next five years prices are set to rise by over 20%.
While there’s no doubt that now is an excellent time to rent in London, there’s still a mixed picture when it comes to rental charges, so tenants seeking an advantageous deal would be well advised to consult an experienced lettings agent, who can negotiate on their behalf. At Moving City we have a huge portfolio of London properties to rent, available to view right now, so call us to register your details.
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