London rental values increased 12% in 2014 and set to rise further
- Credit: PA Wire/Press Association Images
Rental values in Greater London decreased by 11 per cent between November and December 2014, but they showed an annual increase of 12 pc compared to the values for December last year.
The average UK rent was £867 per month in 2014, an increase of 6.6 pc, while rent rises in North West London were significantly softer, increasing only 2.1 pc to £1,645 per month in November 2014.
Rents in the area remained the third most expensive in the country, however, as landlords in Prime London neighbourhoods like Hampstead tend to invest to reap capital gains on a property rather than rental yield.
Martin Totty, Barbon Insurance Group’s Chief Executive Officer, said: “The data points to some big differences in rental market performance in 2014 from town to town and city to city.
“The causative factor behind these differences is as simple as supply and demand. In locations such as Leicester and Cambridge, demand for rental property is outstripping supply.
“By contrast, Croydon and some parts of Essex are benefitting from a relative boom in new property building, easing the pressure on the local rental market and this is reflected by a drop in rental prices.”
Rents for Greater London as a whole fell to £1,393 in December, which HomeLet, the online rental service attributed to a traditional seasonal slowdown. It forecast that rents will rise again in the coming year.
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Mr Totty said: “2014 was predominantly a year for growth in the rental market with rental prices on average 6.6 pc higher than in the previous year.
“With property prices continuing to grow, and mortgage criteria tightening, the rental market represents a much more accessible option for house hunters than the property ladder.
“The demand for rental property is increasing, and we expect it to continue doing so in 2015 as large numbers of people are priced out of buying.
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“As a result, we expect to see continued growth in rental prices across the UK as the new year progresses, particularly as real incomes are starting to rise.”
Leicester topped the chart of places for buy-to-let growth with an increase of 45 pc in 2014, from £421 to £611.
This was followed by Southall in West London, which saw growth of 38 pc, from £719 to £995 per month.