A new report from Savills has indicated that the private rented sector will account for one in five homes by 2016. Rents also look likely to continue their upward trend with average prime London rent showing a 12 per cent increase over the last year.
Rental demand from overseas corporate tenants has also increased with the result that investors are starting to come back to the market with a renewed sense of hope.
Head of Savills Residential Research, Yolande Barnes, says:
"This value dynamic will push out yields and attract investor interest, and there is clear evidence that investor buyers are already emerging from the shadows”.
Savills are expecting South West London, i.e. Fulham, Putney, Wandsworth and Richmond to achieve the highest rental growth this year. Yolande continued:
“High rent rises are not confined to the prime market and, as more aspiring buyers are frozen out of home ownership, demand for private rented stock in the country as a whole can only grow.
Our prognosis for the private rented sector as a whole remains extremely bullish”.
The cost to first time buyers of getting a foothold on the property ladder is likely to keep the demand for rental property high for the foreseeable future.
The last time we saw such growth in the private rented sector was following the recession in the 90s when the private rented sector expanded in response to demand, growing by 27 per cent in a 15 year period.
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