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Prime London leases end: Savills – Mortgage Strategy

Rents for prime London properties rose 0.3% in the first three months of the year, according to Savills.

The housing agency says that while the market is beginning to return to normal seasonal patterns, annual rents in London have fallen for six consecutive quarters, falling to 3.2% in Q1.

Looking at long-term trends, however, rents are about 18% higher than in March 2020 at the start of the pandemic.

In prime suburbs outside the capital, Savills found that rents rose by 0.9% in the last quarter and annual growth slowed to 4%.

In these areas, it says rents are 24% higher than in March 2020.

In general, urban rents continue to exceed those of the surrounding areas. Rents in towns and cities grew by 8.2% year-on-year compared to 2.3% in suburbs.

Built-up areas in the London commuter belt performed better than rural commuter belt areas, rising by 3.9% year-on-year, compared to 1.5%.

Savills research analyst Jessica Tomlinson says: “Rental growth picked up slightly in the quarter, however, insolvency pressures and rising stock mean rental growth remains at the lowest level compared to three years ago.

“But rents remain very high, and the prospect of lower mortgage rates is expected to ease some of the financial burden on homeowners.

“Rental growth continues to outpace capital growth, meaning yields have improved across the sector, which will support continued investment.

“In London, houses are now the most efficient flats, indicating that the apartment market may have reached an affordable ceiling, while renters often have more freedom when it comes to budgets.

“Also, the strong sales market has slowed the number of houses to rent across the capital, particularly in west and north west London.”

Tomlinson adds: “Changing market conditions have caused the gap between landlord and tenant expectations to widen.

“With more choice, tenants tend to bid below asking prices on many properties.

“Great consensus on prices will be very important in the coming months as most agents across London and the country agree that stock will rise over the course of the year.”

He says: “Easily back on the employers’ wish list, regional towns and cities and London’s commuter belt areas – including Chester (3.9%), Birmingham (3%), Cobham (2%) and Weybridge (2%). %) – were the strongest players in the quarter.”

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