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Central London rents predicted to rise by up to 10% in 2011

The latest Residential Property Forecasts report from Cluttons concludes that the significant pressure on households, who are facing depleting incomes and job insecurity, means that it is unlikely that demand for rental property will be dampened.
Tenants have already adjusted to record rent increases of 19.1% in 2010 and now face further rises as the mortgage famine and low consumer confidence feed the demand for rental homes, it points out.

Lower budget properties in the £250 to £650 per week bracket remain both highly sought after and in short supply, as cost conscious tenants seek to keep their outgoings low, which is placing considerable upward pressure on rental values in this segment of the market.

However, existing tenants who wish to renew their contracts are facing smaller rises in the region of 4%, as landlords concerned about the general economic outlook opt to retain quality tenants rather than risk void periods.

‘The Central London lettings market is maintaining momentum during 2011, with rents forecast to grow well ahead of trend, albeit down on the record rental growth seen in 2010. Tenants are really feeling the pinch and are being forced to widen their search areas to secondary locations and beyond,’ said Lynn Hilton, partner for residential lettings.

‘We expect this pace of growth to slow in 2012, although it will remain well ahead of inflation,’ she added.