Road to recovery for London rentals and sales

The prime London rental market is recovering from the worst dip in recent times. With the sales market going into decline in 2008 the unsold stock flooded the rentals market. Massive over supply had a detrimental effect on asking prices and tenants were negotiating very favourable deals and enjoyed 12 -24 months of relatively cheap rents.

RPI has recovered from being below zero to a healthy 5% now. With the sales market seeing more activity too we find that temporary landlords are exiting the market resulting in a more balanced supply and demand.

Many tenants are accepting large increases in rents, compared to last year, and agreeing to renew.

Confidence is low and caution high in both the sales and rentals market. There are no foolish investments and tenants are also being careful with how much they spend on rents and outgoings.

Although banks have started to lend again one still requires close to a 50% deposit to purchase a property. This puts the investments in the hand of the wealthy with a medium to long term view.

Purchasers are using the opportunity to put together portfolios of prime property to rent and hold, realising appreciation in the longer term since other investment markets are proving to be more unstable and risky.