Prime London rents rise

The latest research from upmarket letting and estate agent Savills shows that prime rents in London are still on the up.

They report that the rental market of prime central London continues to be characterised by low levels of supply together with increasing demand from corporate tenants. This has pushed rents up by a further 2.4% over the second quarter taking annual growth to 7.8% and leaving rental values -5% off peak. The core prime market, where rents average around £1,250 per week, has outperformed the rest of the market over the last year as the tightening of corporate allowances has forced tenants to look at more affordable product, as well as private individuals looking for a less costly option in light of current economic conditions. A 3.5% rise over the quarter means that rents in this price band have now recovered to their peak levels.

Yields strengthen

Stronger rental growth compared to capital price increases has already begun to push out yields. Current gross yields of 4.3% in central London are likely to move out to 4.6% by the year end (their highest since December 2005) as values fall while rents continue to rise. This will add to the appeal of London as an investment opportunity and should encourage investors looking for both income and longer-term capital gains.

National rents also jump

As well as prime London residential rents being strong, the latest figures from the Rentindex show that the average residential rent in England & Wales is £587 up 3% in the last 3 months.

Landlord insurance - prime rates