Rental shortage sees prices swell over 12% in London but is it sustainable in 2011?

The prime central London lettings market has seen average rental prices increase by over 12% year-on-year as demand continues to exceed supply, says Sandfords, one of the capital’s leading independent property consultants.
The shortage is attributed to the exodus of buy-to-let investors from the market in the last few years, but landlords are beginning to return, encouraged by higher yields and increasing mortgage availability. Andrew Ellinas, director of Sandfords, comments: “Demand for rental properties continues to grow, in particular for one bedroom apartments of which there remains an acute shortage in prime areas of central London, including Marylebone and Regent’s Park. Whereas last year, tenants could have expected to pay on average £400 a week for a one bedroom apartment, the same property now costs around £450. “However, with increasingly competitive buy-to-let mortgages now available from lenders, we are starting to see landlords return to the market, attracted by the promise of robust rental yields and prospect for strong capital gains in leading parts of the capital. This will have an impact on rental price growth, which I expect to slow in the second half of 2011 as more properties come onto the market reducing competition.”
Today's Conveyancer