A Capital Rental Resurgence?
There are always a number of considerations for landlords, new and old, to take into account when starting, adding to or diversifying their portfolios, especially when it comes to location. The capital has long been a hotbed of BTL activity due to the strong potential yields on offer and the ease in which to let properties. However, with the pandemic impacting the attraction of city living for a variety of reasons, the high-profile London rental market has inevitably suffered over the past couple of years. Although, positive signs are now emerging around a resurgence.
A recent report from Knight Frank suggests that rental values in prime areas of London are now 9% higher than they were pre-pandemic. Within this report, the number of market valuation appraisals in April – a leading indicator of supply – was said to be 40% below the five-year average, while the number of new prospective tenants registering was suggested to be 57% higher over the same period.
The disparity contributed to a 29.2% annual rise in prime central London rental values in April. The equivalent rise in prime outer London was 23.5%. The increases were magnified by the fact that rents hit their low point during the pandemic in early 2021 due to a glut of short-let property compared to the long-let market. Supply has since become scarcer while demand has risen strongly.
With the supply squeeze set to continue over the summer months, rental prices are expected to rise. This is certainly a combination which is likely to attract even more professional landlords to add to their portfolios and maybe even tempt some new landlords to dip their toe in the capital’s buy-to-let waters.