With properties in London seeing rents rise at a significant pace during 2011, investors, landlords and tenants may be wondering whether the growth in the market can continue at such a rate in 2012. Strong demand for homes to let in the capital looks set to push rents up, according to one real estate expert. Director of Ludlowthompson Stephen Ludlow stated that the city "does not have enough private rental properties to come close to meeting the huge demand that is out there". He added that there is no sign that the market will slow down next year, concluding: "Rents are likely to remain high by historical standards and could even increase further."
This prediction of further growth within the London rental sector is widespread, with Hamptons International announcing at the start of November that it anticipates a five per cent increase in rents over the course of 2012. Head of lettings at the firm Lesley Cairns commented: "Rents are likely to continue to rise, although the rise will be moderated as tenants find ever-more creative ways to make life more affordable." She added that an increase in the cost of renting in central areas will encourage people to look towards other parts of inner London, including Islington, Ealing and Clapham. More outlying districts such as Richmond, Wimbledon and Guildford are also likely to benefit from a growth in rental activity, Ms Cairns noted.
Meanwhile, a report published by Knight Frank last month supports Hamptons International's assessment of the future performance of London properties to let, with the organisation anticipating growth of between four and five per cent in the sector during 2012. Commenting on the outlook, Liam Bailey, head of research at the firm, stated that this trend is "more realistic and sustainable for the medium to long term". It therefore appears that investors with real estate to rent in the UK's capital can look forward to a steady income stream from their assets over the coming 12 months, despite the pace of growth slackening compared to the past two years.