Prime central London rental values up for third month in a row
Rental values in the prime central London rose by 0.2% for the third consecutive month in March, pushing annual growth to 4%, the highest rate in more than three years.
The rental value index is now at the same level it was during the summer of 2012, when London hosted the Olympic Games, according to the latest report from real estate firm Knight Frank.
Rental values subsequently dipped as the sales market strengthened but growth returned at the start of 2014 but the lettings market benefited as the UK economic recovery took hold and companies began hiring more staff.
Annual growth was 4%, the highest rate in more than three years but the report says that some landlords are hesitant to agree deals because they believe the sales market could strengthen.
The number of tenancies, viewings and new prospective tenants are up markedly on 2014 rental yields at 2.92%, an increase on March 2014, the report also points out.
The report points out that jobs in London’s financial services sector rose 17% in February compared to 2014 and according to recruiters this is due to oil price stability and subsiding concerns over a Greek exit from the euro zone.
However, it is not a clear cut picture, the report says, and activity and stock levels have been dampened by the kind of indecision that has affected the sales market.
‘While some vendors have become landlords in order to wait out the general election to obtain more clarity around the future political landscape, the overwhelming mood of uncertainty has led to hesitancy as the election draws closer and campaigning steps up,’ said Tom Bill, head of London residential research at Knight Frank.
He pointed out that some property owners who had considered the rental option have been reluctant to sign two year tenancy agreements while there is a possibility the sales market could strengthen in the second half of the year, depending on the outcome of the election.
‘Either way, demand in the lettings market remains strong. In the year to February 2015, the number of tenancies increased by 37% compared with the preceding 12 month period,’ Bill said.
Meanwhile, the number of viewings rose 16%, property inspections increased 14% and the total number of new prospective tenants registering grew by 18%. A stronger lettings market and slower price growth in the sales market resulted in rental yields of 2.92% in March, higher than a figure of 2.83% recorded in the same month last year.