Rental rates in London hotspots leap by a third

The cost of renting a home in popular parts of London has rocketed by nearly a third in a year.
Battersea riverside
A recent study of the rental market in 93 London postcodes brings bad news for the legions of twenty- and thirtysomethings desperate to find a property.

The biggest hikes have been in south London’s Battersea and Clapham. Average rents have grown there by 28.8 per cent over 12 months, according to analysis by Hamptons International and

Tenants in south-west London pay £2,000 a month on average for a two-bedroom flat. Other areas seeing big rent rises are Camden and Regent’s Park (up just over 20 per cent), St John’s Wood and Primrose Hill (up more than 19 per cent), and Knightsbridge, South Kensington, Notting Hill and Paddington (all up around 12 per cent).

Adam Challis, head of research at Hamptons International, said these affluent zone two locations are booming because of a fundamental shift in the corporate market which traditionally looked to prime central London.

But with prices in places like Knightsbridge currently averaging some £2,500 per month, for a two bedroomed flat, austerity-conscious firms are considering more suburban options. “There is a spill-over effect to areas like Regent’s Park and St John’s Wood,” said Challis.

However Challis believes the rent increases of the last 12 months are simply unsustainable, and that as more buy-to-let landlords enter the market and increase supply, rent levels will level off.

Today’s study also analysed the most profitable areas for London buy-to-let landlords to invest in. It found the average gross yield for rental properties in greater London is 5.5 per cent. But landlords in Chingford can expect to earn an average 11.4 per cent. Borehamwood (just under 11 per cent) and Canning Town (just under nine per cent) are also strong performers.

These areas provide the highest incomes because although rents are lower than in grander areas the cost of buying a property is also significantly less.

However Challis warned that these high-yield areas are unlikely to see capital growth and rental homes in less sought-after areas might also attract “lower grade” tenants leading to problems like damage and non-payment of rent.

Follow us on Twitter @HomesProperty and Facebook