Taylor Scott International News
Smaller properties in prime markets in the commuter belt around London continue to see the strongest rental growth in the first quarter of 2016, according to a new research report. There is such strong demand for smaller properties because tenants are faced with the issue of raising the deposit for their first mortgage,’ says the report from real estate firm Savills. It points out that landlords have been hit with a number of measures introduced by the current government in an attempt to limit future investment in the residential sector and Savills expects that these measures to limit the amount of stock which comes onto the rental market, underpinning the growth in rents for existing investors. Rental values of prime property in the commuter zone increased by an average of 1.4% over the year to March 2016 to bring five year rental growth up to 7.6%, reflecting the continuation of modest but consistent rental growth in the period since the middle of June 2012. The figures from the report show that the average rent for one or two bedroom homes is up 2.5% year on year, for three bedrooms it is up 2.8%, for four bedroom up 1.6%, or five bedrooms up 0.9% and for six bedrooms or more up 0.5%. This brings growth over five years to 12.3% for one or two bedroom prime properties, 12.3% for three bedrooms, 9% for four bedrooms, 5.5% for five bedrooms and 4% for six bedrooms or more. The report suggests that the strength in demand for one and two bedroom accommodation reflects the age profile of the tenants in this sector with one third of tenants being in their 20s and a further 35% in their 30s and their personal and financial circumstances. ‘Such tenants face well documented issues in raising the deposit for their first mortgage but are also increasingly attracted by the flexibility of renting given an increasing propensity to move jobs in the first half of their working life,’ said Lucian Cook, director of Savills residential research. ‘With such tenants renting for longer life stages, this has fed into more demand for small family accommodation for tenants in their thirties and early forties,’ he added. He pointed out that markets for these smaller properties are generally serviced by landlords with a strong investment motive for the purchase and ownership of their rental property. By contrast, Landlords of larger prime rental properties are more likely to be letting out a dwelling which has previously been their main residence. ‘Our research shows that 39% of Landlords of properties of five bedrooms or more are letting their property out because either they are relocating for employment purposes or are unable to sell their main home. Landlords of such properties have only seen rents rise by a net figure of 4% over the past five years, and a meagre 0.5% in the past 12 months,’ Cook explained. He also pointed out that going forward, all landlords will have… Taylor Scott International
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