For London, the average asking rent has reached £2,034 per month in December 2018. According to research by Rightmove, this is an increase of 5.3 percent compared with December 2017. This is not surprising given that the number of available rental properties in London has dropped by 22 percent. The increased taxation on second homes by the UK government has proven effective to deter buy-to-let landlords from investing in future rental properties.
Rightmove’s research also predicts that rents will rise by a further 4 percent in 2019 as demand continues to outpace supply. Miles Shipside, Director of Rightmove, states: “The increasing rents in London reflect that demand has been exceeding supply over the past year. When the Government introduced higher stamp duty on second home purchases back in 2016, it deterred many landlords from investing in the buy-to-let market, which in turn has exacerbated this ongoing dearth of available properties, and we’re yet to see any significant boost in stock from the many build-to-rent programmes.”
Prudence Ivey from Homes& Property wrote about the rental hotspots in London. She states that the three most popular areas for renters were all in south London over the last 12 months. These hotspots include: Camberwell, Kennington and Elephant and Castle. Please see the table below.
Prudence Ivey also reported that Hayes, a west London district, experienced the highest increase in rents over the last 12 months. This is due to the demand of build-to-rent flats in Hayes, which tend to be more expensive than homes owned by private landlords. The latter is mainly because of the high-end communal facilities on offer in the build-to-rent flats. The average rent for a two-bedroom flat in Hayes has increased by 11.5 percent in the last 12 months to £1,391 per month.
Prudence also notes that the second highest annual rent increase was in Notting Hill, which was 9.9 percent. The average two-bedroom flat is now renting for £2,725 per month.
Other notable areas of rental increases over the past year include Hammersmith, Canary Wharf and Highgate.
For the rest of the UK, rents are also expected to rise. Rightmove found that there is a 10 percent drop in the number of rental homes available. The current average asking rent is £798 per month and the expectation is for a 3 percent increase in 2019.