Make sure your employer is in on that one – the latest research by Savills predicts that rents will rise by more than 20% in prime London by the end of 2016!
Here’s what the property expert foresees for the next 5 years:
- Private renting will account for 1 in 5 households by 2016.
- Competition among renters will drive rents higher, with growth in mainstream rents forecast to rise by 20.5% by the end of 2016.
- The growth significantly outpaces house price growth which is expected to total just 6.0% over the same 5 years.
- The differential in capital value growth and rental value growth will push out yields and is likely to be the catalyst for renewed investment activity in the sector by corporates and institutions looking for income rather than individuals looking for capital growth.
- Average gross yield on residential stock (IPD) will rise from 5.4% to 6.1%.
- In areas of low owner-occupier demand, and associated suppressed capital values, yields are already high and could see an even greater shift, perhaps averaging nearer 9% by the end of 2016.
- In prime London, rental growth of 20.5% is forecast for the next 5 years, though the forecast of 22.7% capital growth will suppress yields.
- For prime central locations capital growth will continue to be the major draw for investors. Prime locations outside the centre will see some outward yield movements.
“The biggest challenge now is how to deliver much needed supply into the private rentals market.”
- Yolande Barnes, Director of Savills Residential Research.
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