London continues to experience rent growth in June

London, one of the top global rental markets for property investors, continues to make impressive gains, as the UK capital witnessed 4.7 per cent increase in residential rents in June 2018.


Residential rent growth in London has been consistently above 4 per cent month-on-month despite Brexit and its impact on the UK economy. This healthy growth rate highlights the strong fundamentals of the London property market, which delivers decent return on investments to investors.


There is a strong correlation between rental growth and house price-to-earnings multiple. It means that more people are preferring to rent than buy a home in London locations where there is higher house price to earnings multiple, thereby increasing demand and rental values.


According to the latest HomeLet Rental Index, the average rent in the capital now stands at £1596 a month, more than twice that of the UK average rent (£767). The index and average prices are produced using HomeLet’s mix adjusted rental index methodology. This helps to track the representative rental values over time, which factor in changes in the mix of property types and locations of rented properties.


In fact, London continues to lead residential rental growth across the UK except for Northern Ireland, which registered 5.1 per cent annual increase in rent in June. London was followed by West Midlands, which saw rent increase by 4.1 per cent. Scotland registered 2.5 per cent increase in rent; Yorkshire & Humberside 2.3 per cent; East Midlands and North West 1.3 per cent; East of England 1 per cent; South West and North East 0.8 per cent.


Rent increase in the South East was flat with an average monthly rent of £1,015, which in fact, was the second highest for the UK after London. Only Wales saw negative rent increase at -0.8 per cent in June 2018, the HomeLet Rental Index revealed.


The demand for quality rental homes is propelling the growth of rents in the UK, especially London. A survey conducted by HomeLet revealed that 17.9 per cent of the landlords intended to increase the rent in the next 6 months while 18.7 per cent of the landlords planned to hike the rent over the next 12 months. This demonstrates the landlords’ confidence in securing higher rental income in the coming months.


When compared to London, the annual rent increase across the UK is 1.8 per cent (average monthly rent £924). When London is excluded, the average UK rental value was £767 in June 2018, this is up 1.3 per cent on last year.


Investing in a London residential property for consistent rental income is a wise investment option. Strawberry Star has several homes for sale in most sought-after postcodes of London where rent increase is seen. If you are keen on buying a rental home, call our London Sales & Lettings team for details.


Source: HomeLet Rental Index