The property market in London is constantly evolving and improving, especially in regards to long-term letting of properties. Many London residents are opting for long-term letting opportunities instead of buying a home outright due to the ample supply of valuable rental homes available.
There is a currently an abundance of high-end homes available for rent and there are several more high-profile housing structures that are expected to be built in London’s prime real estate territory within the next few years. For example, the office space in the South Bank Tower in Southwark is in the process of being converted to luxury residential apartments. Rental homes in the top end of their market range around £5,000 a month in rent for a two-bedroom flat.
The current signs of recovery in the domestic market accompanied by more relaxed credit restrictions have turned some more affluent residents into homeowners. Those wealthier renters may experience significant rent increases in the near future, but they do have an extensive variety of rental options to choose from.
Although there are an abundance of high-priced rental options in London, the low end of the spectrum seems to be lacking affordable rental homes and presents the major problem for the government. Rent in London is already considered relatively high compared to the average person’s income, which makes the newer, high-priced rental options unattainable to most residents. Middle and low income, long-term renters will require more housing options in the £1,000 to £2,000 per month price range as demand increaces.
London is still in recovery from the recession – regardless of recent green shoots and economic growth – and government cutbacks in financial support for the unemployed are increasing the need for more low-end rental homes. Many people are struggling to make ends meet and cannot afford a deposit to purchase a home or they are unable to qualify for a mortgage.
Average Monthly Rent
The average cost of rent per month for the third quarter was £1,090 according to the Countrywide Quarterly Lettings Index. Compared with the £1,107 average from last year, the cost of renting has decreased by 1.5 percent. This slight drop may be due to landlords lowering rent to quickly fill voids.
Trend Predictions from 2013
Last January, The Telegraph posted an article predicting how the London property market would hold up in 2013; What’s in store for the property market in 2013? The article predicted an increase in the cost of renting due to high demand for rental property, which has actually proven not to be the case. The average monthly rent has dropped, but they were right about the increase in demand for letting opportunities, which has consistently risen for the past few years.
Trend Predictions for 2014
The housing market in London will still be in recovery for the next few years, which will make long-term letting the only option for most residents. Many high-end letting opportunities will be available to those who can afford to pay £5,000 a month in rent. The concern in 2014 will be creating enough low-end letting opportunities for the majority of the younger population. Student debt and an uncertain economy will make it incredibly challenging for people just starting out to purchase a home directly.
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