According to a recent report by Savills on the status of the residential rental market, the last year has seen a gradual decrease in the fall of rentals across prime London property at a figure of 0.8%, with cheaper properties outperforming those which cost more. Signs of improvement in the market can be seen elsewhere with a 0.2% increase in rentals within other prime London markets in 2018. Across both inner London and commuter locations, there is evidence that smaller properties are in demand, catering to younger tenants not yet on the property ladder.
Recent rental market decline, unlike earlier catalysts such as 9/11 and the financial crisis, can be put down to a number of contributing factors such as uncertainty in the financial sector, the cost of stamp duty versus the cost of renting, competition of newbuild supply and Brexit. Despite this, and evident from previous decades, there is confidence that supply for rentals will remain in demand.
Employer earnings within London and the surrounding commuter belt remain crucial for the rental market. With average salaries in some areas exceeding those of average workplace earnings, the resulting exported earnings levels of £65.4 billion for inner London and £24.3 billion of imported earnings in outer London, are reassuring for the future rental market.
In addition, an agreement was made between Britain and the EU in November 2018 whereby London’s financial centre will have the same access to EU markets as other key trading countries such as the US and Japan, meaning it will maintain a competitive edge within the European market.
It is also predicted that overseas investment as well as an influx of new build stock are likely to increase over the coming years once the status of Brexit is known. The future of the rental market therefore looks to be encouraging.
In our opinion this will continue to underline the interest in Residential Blocks in Central London.