Prime London rental rises set to outpace sales values in 2015
PUBLISHED: 16:31 18 December 2014 | UPDATED: 16:31 18 December 2014
Rent rises in central London are expected to exceed house price growth next year, as pre-election jitters continue to keep the property market subdued.
Predictions by estate agent Marsh & Parsons suggests that Prime London property growth will be an average of 3-5 percent in 2015, compared to 11.4 pc this year, while strong tenant demand is expected to boost rental prices by 10 pc next year.
The highest rental to sales increase ratio was seen in St John’s Wood, where sales values increase by 2.6 pc, while rents increased 9.5 pc over the year. Marylebone rents increased 10.9 pc, while sales were up 5.9 pc.
Prices in Hampstead told a different story in 2014, with sales up 4.9 pc whereas rental values decreased by 7.5 pc.
Letting agents across Prime London suggest that the combination of political uncertainty and the spectre of interest rate rises, as well as recent Stamp Duty changes, could push potential buyers of £2 million + houses into the rental market.
Richard Bryce, head of lettings at Aston Chase said: “I think that with the possibility of a mansion tax looming more large properties are going to come to the market next year.
“I also think that some people may decide to rent, rather than buy larger houses, especially those re-locating. Neither of these things are necessarily a bad thing for the letting industry.”
Research by Knight Frank also suggests that the mansion tax is already having an impact on the lettings market, even though the outcome of next year’s election is still far from certain.
Analysis by the estate agent has found that there are approximately 20,000 rental properties in London with a capital value of more than £2 million – the threshold for the tax – with high concentrations of these in Westminster and Camden.
Tim Hyatt, head of lettings at Knight Frank said: “There has not been any clarification as to whether the proposed mansion tax would be the responsibility of the landlord or the tenant but our assumption is that it will be the landlord.
“However, there is a degree of uncertainty in the run-up to the election and we are aware of instances of tenants asking to be protected from any liability arising from a possible mansion tax and for that to be written into the tenancy contract.”
Anecdotally, there is little concern from existing or new tenants when it comes to mansion tax at the moment.
Mr Bryce said: “We don’t yet know what implication the Mansion Tax might have from a tenant’s perspective.
“Inevitably it will have some sort of impact but I haven’t had anyone asking me about it yet. I’m quite surprised by that given the amount of noise about it in the media.”
Thom Atkins, head of lettings at Knight Frank in Hampstead said: “The main implications for tenants if a mansion tax were to come in is that I’d expect landlords would want to load it into the rent. I’d expect it to drive rental prices up to pass the cost onto the tenant.
“At the same time, there’s also got to be an affordability level. There wouldn’t be any point in trying to get somebody who’s paying £350/week to pay £500/week.”