The recovery in rents in London could revive capital sales…

Rapidly rising rents could spark a new wave of investment buyers in London, helping to resuscitate the capital’s sales market.

This is the view of real estate website Home, which published its latest market overview.

He says the recovery of the rental market in London is accompanied by a reaffirmation of fundamental value, especially in the form of yield. “This key change will attract the attention of hitherto wary investors since the [Covid] epidemic, but there are good deals to be had right now in the capital region and the prospect of future capital gains is huge.

The site says the London sales market was primed for recovery at the start of the Covid outbreak after several years of sideways price action. It can therefore be said that a return to the growth phase of the real estate cycle is now well overdue and that the rapid rise in rents – under very favorable lending conditions – seems to be the green light that the market has been waiting for.

Annualized growth in asking rents in Greater London has now moved into positive territory for the first time since the start of the pandemic (up 1.3%) and all boroughs without exception are posting rent increases over the past three last months.

The largest increases in asking rents in the last six months alone are in the City (up 36.0%), Kensington and Chelsea (up 20.0%), Westminster (up 17.7%) and Wandsworth (up 16.7%).

Outside of London, scarcity continues to drive up rents.

He says the low number of properties for sale across the country – down 32% from June 2019 – may be because with a buoyant rental market, fewer sellers want to give up rental income.

“Double-digit rent increases and low vacancy periods are clearly an attractive alternative to selling a safe asset in uncertain times,” Home says.

“A marked reduction in the supply of rental properties now persists across all English regions, Scotland and Wales, supporting recent record increases outside of London. However, rent increases in the regions are slowing as some demand now shifts to central London.

The largest annualized average rent increases remain in the East of England (up 11.0%) and the South West (up 14.6%).

Sallie R. Loera