Rents in London Due to Rise Over Next Decade

LONDON, ENGLAND, November 10, 2012 (Press-News.org) London residents who are working in the capital can expect to pay rent rise increases over the next ten years because of the lack of affordable homes available. The prediction was outlined in a research paper report published by Cluttons and researched by Professor Michael Ball from the University of Reading.

The research paper predicts that rental increases will be higher than house prices growth by 1% over the next decade, and that average rents will increase by 5% per year and house prices increase by 4% per year. The reason for this extensive growth is because London is the largest housing market in the UK combined with the the supply of housing not expanding at the rate that is needed by people looking for housing in the city. Because of this shortage, pressure will be put upon rental values and property values to increase.

The research paper also reveals that household numbers in London now will rise up to 38,000 per year until 2028 and that the housing stock over the same period could rise by 21,000 per year, which will cause a deficit in the availability of houses for sale and for rent. The indicator for this lack of housing will be higher property values and rental rates.

London has the highest concentration of renters in the UK with 880,000 properties on the market for rental and the amount of people renting in the last 20 years has doubled due to a number of factors. The rise in property values has forced first-time buyers to rent rather than buy their own home and the difficulty in obtaining mortgages has meant that buyers cannot buy property. Mobility is another factor with younger renters preferring the convenience of renting and lower costs associated with it.

Earnings also affect rental values in the market with the majority of renters earning higher wages which will have a knock-on effect on rental values. Landlords who have seen a lower return on their rental yields than expected and are paying higher tax on rental properties are also put off by owning rental properties and release them. The resultant lack of landlords and viable rental properties on the market will also put greater demand on rental properties and push rents higher.

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