The super rich in the capital are forking out an extra 1.4 per cent to rent in prime London areas, signalling a continued demand for luxury spaces in the capital.
According to data by estate agent Savills, over the past three months, London’s wealthiest tenants are also on the hunt for smaller spaces to rent with growth for one-two bed properties up 1.6 per cent.
However, the property agent said that a “lack” of stock available has pushed the prices of homes in affluent regions of London hot spots such as South West and North and East London up 1.8 per cent and 2.8 per cent.
Jessica Tomlinson, residential research analyst at Savills, said: “While the rental market is continuing to defy all expectations, rising inflation and the increased cost of living means that we cannot expect rents to keep pace,”
Just under 60 per cent of Savills agents agree that a lack of stock is constraining tenants choices, while a third say that tenants are expanding their search across multiple London locations.
“With some landlords selling up, and tenants locking in for longer to secure existing rental prices, the market continues to suffer from a lack of stock.
However 43 per cent of London agents believe that stock will increase over the next three months as tenant demand waivers, and as more accidental landlords filter through from the sales market,” Tomlinson added.
The lack of demand has also led to a demand in the middle class regions of London’s inner commuter belt with demand for homes in Tunbridge Wells and Harpenden up 3.3 per cent and 2.6 per cent respectively in the first leg of the year.
Tomlinson explained:“Rental growth has picked up again after a seasonal slow down experienced towards the back end of last year.
“Here too, smaller properties are continuing to outperform larger homes, a sign that the market is now dominated by needs based, rather than discretionary tenants who tend to spend more.”
Uma Rajah, CEO and Co-Founder of CapitalRise, commented that as “London continues to attract buyers, tenants, and investors from around the world, boasting fine dining, famed museums, best-in-class entertainment, and a thriving financial hub.
“The almost fixed supply of Prime Central London (PCL) property also helps to maintain demand and harden rental prices. The capital enjoyed rental growth of 1.4 per cent in Q1 2023, with PCL at the heart of this, recording the highest quarterly growth of all London regions in Q4 2022 at one per cent, and second highest annual growth at 9.2 per cent.
“This continued success is indicative of the PCL market’s overall attractiveness and ability to bounce back quicker from market shocks, such as the mini-budget from the final quarter of last year. Even during the pandemic, PCL was less impacted compared to other London markets, not least the rest of the UK.”