Landlords in London will be delighted that there is finally some good news for them! Harrisons is forecasting a further increase in rent prices in 2019 resulting from the lettings market's widening supply-demand imbalance.
In 2018, pockets of London benefitted from early stages of this inflation, with 17% growth already seen in the Tower Bridge area (data from Chestertons).
The reduced supply is owed primarily to an exodus of landlords from the buy-to-let market in response to the phasing out of tax relief on finance related costs, resulting in a sharp decline in rental property listings. In London, there has been a 60% fall in the volume of people investing in the buy-to-let market.
Meanwhile, there has been a 17.4% rise in the number of tenants entering the private rental market across England and Wales over the past 12 months, with demand in London up almost 25% in 2018 (data from Haart). The number of tenants renting in London expected to further rise by 23% in the next four years, meaning that demand is far outpacing supply.
Despite many amateur landlords having to scale back their portfolios or leaving the sector altogether, investing in the London market is still a very attractive proposition for professional landlords with low interest rates, which is likely to continue, and higher rental returns. In 2018, private landlords' revenues grew 6.4% on the previous year.
Buy-to-let is still viewed as a lucrative and relatively low-risk investment opportunity, despite the increasing amount of regulation that has been placed upon the industry. Typically, property performs better over a longer period – in terms of consistent returns – than other asset classes such as stocks, shares, government bonds and cash ISAs.
If you'd like to discuss your individual investment motives in more detail, get in touch with one of our experts.