Despite slight Jan falls, 8% rent rises are expected this year

Landlord Expert
By Landlord Expert February 21, 2011 10:39

First-time buyers who can't yet afford to buy will be dealt a further blow with rent rises of as much as 8% expected, according to Savills.

The estate agent is predicting further rises of 8% across the most desirable London locations and 7% in the most sought-after central zones. These rises follow average rent rises of 11.5% across the capital last year.

Those in central London will be hit hardest, but tenants outside the capital will also see rises. Although the LSL Buy to let index shows a fall of 0.3% in January compared with December, rents are still 4% higher nationwide than a year ago, and comparison site Money.co.uk estimates that one in two tenants will be charged at least an extra 4%.

"Stock shortages persist, which is good news for landlords," says Jacqui Daly, director of Savills residential research. The study shows that landlords in prime north London locations such as Hampstead and Islington prosper the most: rents there shot up by 17.6% last year.

But for tenants already feeling the squeeze, it's a bitter blow. According to the Association of Residential Letting Agents, in the last three months of last year 40% of its members reported an increase in tenants struggling to meet payments. This was the first time the number has risen in 18 months. This suggests that job losses and pay cuts are beginning to take hold, the association says.

The impact of higher rents will also be felt in the residential sales market: high and increasing rents give aspiring buyers little chance to save for a deposit.

Landlord Expert
By Landlord Expert February 21, 2011 10:39

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