Taylor Scott International News
Rental values in prime central London rose for the seventh consecutive month in September, though at a slower rate than in recent months, the latest index shows. An increase of 0.2% took annual growth to 1.6%, which is the highest rate in two and a half years as the rental market in prime central London continues to recover, according to an analysis from real estate firm Knight Frank. The recovery, which began at the start of the year, comes as the UK economy returns to health after the financial crisis. Last month, the Office for National Statistics said the country’s economy was 2.7% larger in the second quarter of the year compared to its pre-crisis peak. It also revised its second-quarter growth figure higher to 0.9%. Similarly, the rental value index is fast approaching the pre-Lehman Brothers peak recorded in March 2008. Rental values fell before rising in 2011 to exceed that peak due to a supply squeeze but had been in decline since September 2011 until the start of this year due to the fragile UK economy. The number of new prospective tenants in September was 22% higher than the same month last year and the total for the first nine months of the year was 19% higher than the same period in 2013. Meanwhile, the high number of new tenancies agreed by Knight Frank in September meant the total in the first nine months of the year was 48% higher than 2013 while the number of tenancies commenced was up 55% over the same period. However. Tom Bill, head of London residential research at Knight Frank, the rentals market will also benefit as the uncertainty of next May’s general election dampens demand to some degree in the sales market. ‘While there is no marked trend of vendors deciding to become landlords and buyers becoming tenants, it is happening to some degree and there are increasing instances of properties being marketed to both the sales and rentals market,’ he said. He pointed out that annual growth for rental values in the £1,500 per week and above category was 1.9% while it was 0.9% for properties below that figure. Rental yields also continued their recovery in September, rising from 2.82% to 2.84%. ‘It is not high by historical standards but it was the largest monthly increase in more than three years,’ added Bill. Taylor Scott International
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