Rents in London hit record high: average monthly cost exceeds £2,000 as number of homes continues to decline

Average rents in London have hit a record high of just over £2,000 per month and will continue to increase, according to a report released today.

The average asking rent in the capital hit £2,034 at the end of 2018, an increase of 5.3 per cent compared with the year before, the latest research from Rightmove found.

The property website said this was due to a 22 per cent drop in the number of rental properties available in the capital as buy-to-let landlords were deterred from investing by increased taxation on second homes.

Rightmove is predicting that London rents will rise by a further four per cent in 2019 as supply fails to keep pace with demand.

“The increasing rents in London reflect that demand has been exceeding supply over the past year,” said Rightmove director Miles Shipside.

“When the Government introduced higher stamp duty on second home purchases back in 2016, it deterred many landlords from investing in the buy-to-let market, which in turn has exacerbated this ongoing dearth of available properties, and we’re yet to see any significant boost in stock from the many build-to-rent programmes.”

The current dip follows a surge in the number of available rental homes, which caused rents to drop below £2,000 per month for almost three years.

The three most popular areas for renters over the past 12 months were all in south London. Camberwell, where the average asking rent for a two-bedroom flat is £1,573, topped the table of the capital’s most in-demand rental spots, followed by Kennington, where the average monthly rent is £2,307, and Elephant and Castle with an average rent of £1,892.

Rents increased most in the west London district of Hayes. The area has become a hotspot for build-to-rent flats, which tend to be more expensive than homes owned by private landlords due, in part, to their provision of high end communal facilities.

The average asking rent for a two-bedroom flat in the area increased by 11.5 per cent in a year to £1,391 per month.

The second highest annual rent increase, of 9.9 per cent, was in Notting Hill where the average two-bedroom flat is now offered for £2,725 per month.

Hammersmith, Canary Wharf and Highgate were the remaining areas where rents increased the most in a year.

Outside London rents are also set to rise due to a 10 per cent drop in the number of rental homes available.

Rightmove expects UK rents to rise three per cent from the current average asking rent of £798 per month.

The London commuter town of Hertford saw the greatest rise in popularity among renters outside the capital, followed by the Liverpool suburb of Bootle and Bracknell, near Reading in Berkshire.