Average rents in prime central London are on track to reach £1,052 per week by December, an increase of £15 on current weekly rents of £1,037, predicts property consultants Cluttons.
This translates into an additional £780 a year for tenants that agree to the increase. By Christmas, tenants in the capital are likely to be paying 30% more than they were at the trough of the market in December 2009, when weekly rents stood at £809.
Tenants are already struggling to cope with the strong growth in rental values, especially in the context of uncertainty over jobs and the future of the economy. With mortgages still unobtainable for many and house prices in central London set to accelerate, tenants have little choice but to continue to rent despite the rising costs.
Persistent demand for lower budget homes has resulted in an acute shortage of properties at the lower end of the market, in the £250 to £700 per week price bracket. Soaring rents, coupled with rising household bills and high levels of inflation, have left tenants reassessing their outgoings in an attempt to minimize costs.
Tenants already renting these less expensive properties are now facing uplifts of up to 10% at renewal. Overall, average uplifts at renewal range from 5% to 10%, but rise to 20% in some cases.
‘Tenants are stuck between a rock and a hard place, with many struggling to buy in London due to high prices and little opportunity to save a deposit as rents skyrocket. With rents expected to rise another £15 per week between now and Christmas, tenants are having to be increasingly flexible on the location, standard of property and sharing arrangements,’ said Lynn Hilton, partner for Residential lettings.
‘As demand for property continues to outstrip supply at the lower end of the market, now more than ever, prospective tenants should ensure they are in a good position to act when the right property becomes available and have a holding deposit and references in place,’ she added.