International demand for homes in prime central London continue to rise

The Eurozone crisis has continued to boost international demand for houses and flats to rent in Fitzrovia, Mayfair, Hyde Park, among a host of other prime central London locations.

 

The fact that London is generally viewed as a 'safe haven' amid the economic turmoil in the Eurozone means that more people are moving to the capital in order to escape the calamity and preserve their wealth.

But while many foreigners may prefer to buy property in London, the general shortage of homes on the sales market is forcing them to rent property instead.

"We have reached the point of no return for the housing market," said Gemma Duggan of the National Housing Federation. "Successive governments have failed to tackle the under-supply of housing and time is now running out."

 

A quick online search for a house for sale in Little Venice, for example, a west London district a short distance from Marylebone, which is generally popular with international homebuyers, shows that there are very few houses currently on the market in the area. Consequently, many people looking to buy a home in the area will have to opt for rented accommodation until more houses become available.

The shortage of properties for sale also reflects a sharp rise in the volume of people snapping up homes in prime central London.

According to estate agency WA Ellis, there was a 36 per cent rise in the number of property transactions in prime central London from September to October.

Tim des Forges, partner in residential sales at WA Ellis, said: "The first week of half term was unprecedented, and is perhaps now bringing in buyers who avoided London during the summer's events. This is illustrated by the total numbers of sales in prime central London in October, which is up by 35.81 per cent on September."

The company's letting division has also been rather busy, particular when it comes to letting homes in the £1,000-£3,000 per week bracket and more tenants are staying for longer; the average tenancy now stands at around three years, according to WA Ellis.

"These tenants are seeking two or three bedroom properties in Prime Central London, and any property that presents well is letting quickly," said WA Ellis' Lucy Morton.

Not only are more people now required to live in rented accommodation, but the resulting shortage of homes for sale means that property prices in prime central London are rising.

The latest Knight Frank Prime Central London Index shows that the average price of a home in the region appreciated by 0.8 per cent in October compared to the previous month, pushing annual growth to 10.1 per cent. Prices are now 52 per cent higher than in March 2009.

"Our analysis of market activity confirms that average prices have climbed 10.1 per cent over the past year, with flats [11.1 per cent] outperforming houses [8.4 per cent] in terms of growth, said Liam bailey of Knight Frank.

Among the areas performing particularly well in terms of price appreciation is Marylebone, which has seen a growth over the past year of 14.5 per cent – the highest annual rise of all areas covered by the index.

Property prices in Marylebone are rising on the back of a general shortage of properties for sale in the area in relation to high demand. But with many people wanting to live in the area, more people are now prepared to consider looking at a house or flat to rent in Marylebone.

 

Andrew Ellinas of leading estate agency Sandfords said: "Marylebone, with its wealth of elegant properties and desirable High Street, has been attracting affluent buyers for a number of years. Demand for properties priced between £1.5 and £4million is intense."

With demand for housing in prime central London expected to continue to rise, very few people would bet against further capital growth and rental price rises moving forward over the next few years.

Rents could soar on the back of London housing shortage

Anyone searching for a flat to rent in St Johns Wood will find that there are not that many homes to choose from. In fact, anyone looking for a home to rent anywhere in and around prime central London will almost certainly discover a dearth of properties to let due to the growing housing shortage in the capital.

Log-on to any major property portal and search for ‘houses to rent in Fitzrovia’ or ‘apartments to rent in Mayfair’ and you will see that there is a restricted selection of properties to choose from.

The growing demand-supply demand imbalance in prime central London may be welcome news for landlords, but it is creating problems for some tenants as rents continue to soar.

The cost of renting a home in England and Wales increased by 1.1 per cent in September to reach a new record high of £741, on average, per month, according to LSL Property Services. This was 1.1 per cent higher than August and 3.2 per cent up on the same month a year earlier.

“Rents have risen consecutively for half a year as tenant demand strengthens on the back of a historically subdued mortgage market,” said David Newnes, of LSL.

He added: “Every pound monthly rents go up by is another pound that renters cannot save for a deposit for their first home. This is lengthening their stay in rented accommodation, and increasing competition in the private rented sector.”

With housing supply unlikely to improve anytime soon, many experts project that rental prices across many parts of the UK will continue to soar, particularly in prime central London.

The average rent in London is set to rise to £404 per week by 2018, according to a study by the National Housing Federation.

David Orr, Chief executive of the National Housing Federation, said: “Only by addressing the chronic undersupply of new homes can we stem the financial pressure on families.”

Many would-be vendors have decided not to sell their homes and take advantage of the buoyant rental market by letting them out instead, according to Julia Garber of Sandfords’ letting division, which specialises in offering houses and apartments to rent in Fitzrovia, St Johns Wood, Marlebone and Primrose Hill.

Garber said: “High rents have rents have persuaded many property owners to remove their flats and houses from the sales market and let them out instead.”

Increasing rental values is also expected to attract more buy-to-let investors seeking to beat historically low bank saving rates.

With savers receiving dismal returns from banks and building societies in stark contrast to soaring rental prices and higher yields, more people, and not just existing homeowners, are unsurprisingly turning to buy-to-let property as a means of supplementing their income.

Adam Feather, director, Robert Anthony estate agents, commented: “Existing property market conditions in London are perfect for landlords. With many would-be property buyers struggling to gain a foot on the housing ladder, rental demand will inevitably rise further, pushing rents higher in the process. That’s why buy-to-let properties generally offer stable, low risk investment returns.”

Property sales expected to rise in prime central London

Many experts estimate that property sales could rise on the back of government efforts to help make mortgages more readily available following a rise in the number of mortgage approvals issued.

The Bank of England has announced that mortgage approvals increased following the launch of the £80 billion Funding for Lending Scheme (FLS) by the BoE and the Treasury in August designed to increase the availability of cheaper loans and mortgages for businesses and households.

So far over 20 banking groups, including the five largest lenders in the UK, have signed up to the Funding for Lending Scheme, while funding costs have fallen by around one percentage point.

Fresh data from the Bank of England shows that the volume of loans approved for property purchases increased by 2,103 to 50,024 in September, while the number of loans approved for remortgaging rose by 1,860 to 28,343.

"Market conditions are definitely improving at present," said Brian Murphy, head of lending at Mortgage Advice Bureau. "The Funding for Lending scheme is now starting to make an impact and should be of benefit to building societies as the months go on as they have remained committed to increasing their lending this year."

The latest Royal Institute of Chartered Surveyors UK housing market survey shows that expectations for future sales reached their highest level since May 2010. During September, a net balance of 26 per cent more respondents predicted transactions to grow during Q4 2012.

Peter Bolton King, Royal Institute of Chartered Surveyors' global residential director, said: "Surveyors are optimistic that the run in to Christmas could see an increase in activity in many areas of the country."

The anticipated rise in housing activity could potentially help to drive up property prices across parts of the country, particularly in prime central London and its outskirts despite the fact that property prices have already soared in the past year or so. 

In the London Borough of City of Westminster, for example, prices increased by close to 20 per cent in the year to August due to a general shortage of properties for sale in Little Venice - forms part of Maida Vale - as well as Hyde Park, St Johns Wood, Mayfair, among other parts of the borough.

"Property prices in the City of Westminster rose by an astonishing 18.3 per cent in the year to August, according to the latest figures from the government Land Registry," said Andrew Ellinas, director of leading estate agents Sandfords. "The increase is the highest in the UK by a very long way."

The jump in property values means that any house or flat for sale in Little Venice, St Johns Wood, Hyde Park, Mayfair, or any other part of the borough for that matter is now significantly higher compared to this time last year.
 

"The major shortage of houses and apartments for sale in Fitzrovia, St Johns Wood, Hyde Park, Mayfair, Maida Vale, among other parts of the City of Westminster in relation to high demand are driving property prices upwards," said Adam Feather of Robert Anthony estate agency.

With very few new homes being delivered in prime central London, it is highly unlikely that the increase in property values will slow anytime soon – not for as long as the capital continues to be seen as a safe haven to buy property.

Prime Central London property market activity picks-up

During almost six weeks of the Olympic and Paralympic Games in London, the amount of people out looking at property fell as many Britons spent time watching sporting events instead.

Research conducted by the Royal Institute of Chartered Surveyors reveals that during the Olympic Games nine per cent more surveyors reported falls in demand, in comparison to four per cent in July, illustrating the fact that Olympics was a genuine distraction for potential buyers.

"Understandably, the amount of people out looking at property fell away slightly," said Ian Perry of the Royal Institute of Chartered Surveyors.

However, with London’s golden summer now a fading memory, more people have turned their attentions back to property resulting in greater activity, particularly in the prime Central London property market.

The latest Cluttons Residential Investment Monitor report reveals that activity in the prime Central London property market has increased significantly since the Olympic Games ended helping to push property values higher.

Cluttons report that average home prices across London increased by 3.1 per cent during the third quarter of this year, after a more modest increase of 0.9 per cent in the second quarter. This healthy growth leaves average property values in prime Central London 3.33 per cent higher than the third quarter of the 2007 market peak and 7.1 per cent higher than the corresponding period last year. 

Research shows that property for sale in Fitzrovia, Mayfair, Marylebone, Hyde Park, among other prime areas are of particular interest as far as purchasers are concerned. 

Demand for flats and houses for sale in Fitzrovia, Mayfair, Marylebone and Hyde Park is particularly high among international purchasers

Investors from India, Western Europe, Russia and other Eastern European countries are increasingly focussing on properties in these areas, illustrating that foreign investors have become the dominant force in the London property market.

"The increase [in prime central London property prices] is the highest in the UK by a very long way, and justifies the interest in prime central London that has been shown by investors from around the world through the thick of the global financial crisis", said Andrew Ellinas of leading estate agents Sandfords.

But despite the hike in property values, prime central London rental values have somewhat stabilised, and in some cases have even dipped, as unemployment and the recent Olympic Games all contributed to a general market slowdown.

The latest analysis from the property adviser Savills shows that small falls were seen in prime central London rents, following a slight decline in demand for property to rent in Fitzrovia, Mayfair, Kensington, along with a host of other highly desirable centrally located areas.
 

The decline in the volume of people renting was driven by a weakening of economic indicators and the employment outlook in the financial and business services.

Sophie Chick, Savills research analyst, said: "Constrained budgets means tenants are increasingly aware of the cost of space, a trend we believe will continue."

Despite a slight fall in prime London rental demand, most experts expect activity to pick up again now that the UK is moving out of recession.

Prime Central London Property Price Growth Continues

Prices for the best residential properties in central London increased further in August 2012 on the back of consistently high demand from national and international homebuyers, according to the latest Knight Frank report.

Knight Frank's Prime Central London Sales Index for August 2012 reveals that the average price of a home in prime central London appreciated by 0.5 per cent in August compared to the previous month, taking annual growth to 9.9 per cent.

Prices have now increased by a staggering 49.9 per cent since the post credit-crunch low in March 2009, and are now at an all-time high - 14% above their previous peak in March 2008.

Liam Bailey, Knight Frank's head of residential research, said: "The strongest price growth over the past three months was seen in the £10m+ price bracket with an increase of 2.9%. The slowest growth, 1.4%, was seen in the £1m to £2.5m bracket, which could be explained by uncertainty surrounding the new stamp duty rate."

The study shows that the greatest property price rises have been seen in the likes of Knightsbridge, Notting Hill and Belgravia. This has been supported by continued demand from international buyers, notably those from Russia, India, France and Italy.

But other central London areas such as Baker Street, Hyde Park and Marylebone have also posted sharp property price gains, reflecting high demand from a wide range of home buyers, including many investors seeking to take advantage of soaring rental values.

Andrew Ellinas, director of leading estate agents Sandfords, said: "Marylebone, with its wealth of elegant properties and desirable High Street, has been attracting affluent buyers for a number of years. Demand for properties priced between £1.5 and £4million is intense, resulting in properties selling within an average of just seven days in Marylebone."

Aside from rising property prices, rents have also been increasing in these areas, reflecting high demand for property to rent in Marylebone, Baker Street and Hyde Park.

 

David Newnes, director of LSL Property Services, commented: "The rental market is also entering its summer peak, as recent graduates and those with new jobs begin to look for new accommodation. With more tenants on the move, alongside long term underlying demand, fierce competition for properties is enabling landlords to increase rental prices to new highs."

As lending to those without substantial deposits remains depressed, demand from people looking for a house or flat to rent in Marylebone, Baker Street and Hyde Park among other surrounding areas is likely to rise in the long-term - providing further upwards momentum for rents.
 

 

This is likely to push people out to secondary areas in London, boosting demand for rental accommodation in Maida Vale, Little Venice, St Johns Wood, among a host of other desirable destinations offering easy access into Central London and the West End.

This in turn will almost certainly boost activity among property investors, especially landlords looking to cash-in on heightened demand by looking at the potential flats and houses for sale in Little Venice, Maida Vale, St John’s Wood and beyond.

"Areas such as Little Venice, Maida Vale and St Johns Wood can be seen to be prudent investments. Entry level pricing is lower and rental demand continues to be strong," said Yasser Elkaffass of Adam Hayes.

 

 

Wherever investors choose to buy property in London, there are fantastic investment prospects available, subject to necessary due diligence being undertaken.

London Property Market Strengthens Further

The average price of a UK home increased by around 1.3 per cent in August, the biggest monthly rise in two and a half years, led by gains in London, according to the latest figures released by Nationwide.

Property prices are being driven upwards by a high level of property investment activity as investors seek to take advantage of high rental demand, particularly in the capital.

With many would-be first time buyers struggling to raise the necessary finance required to buy a property, a high number of people are being forced to rent property instead, pushing rental values higher in the process; an attractive proposition for shrewd investors looking to cash-in.

Steve Hicks, managing director of Genie, says that the biggest problem for first-time buyers is the need to save for a deposit on a mortgage, which is currently almost unachievable for many who are struggling with their day-to-day needs. Yet, the increase in average house prices will make it harder still.

"It is already incredibly difficult for people to get on that first rung of the housing ladder so news that average house prices are on the increase means that it will be even harder, said Mr Hicks. "Still the fact remains that the average deposit for a first time buyer in the UK currently stands at £26,000 up from £12,000 five years earlier, an increase of 117 per cent."

Investor demand for homes in London is being significantly boosted by international homebuyers, many of which are benefitting from a favourable exchange rate.

Estate agents Cluttons report that compared to the price peak in the third quarter of 2007, home buyers from the Far East are now benefitting from price discounts of as much as 60 per cent and home buyers from the Middle East as much as 30 per cent, as a result of the weakened sterling currency. With no immediate appreciation in the value of sterling anticipated any time soon, this advantage looks set to continue for the foreseeable future.

Sue Foxley, head of research at Cluttons, said: "International buyers have long bolstered demand for property in the capital, pushing up prices as the supply shortage continues."

Cash buyers, both domestic and foreign, are still very much in evidence in popular London markets, such as St Johns Wood, due to the fact that demand for property to rent in St John's Wood is far outstripping supply, pushing rents higher in the process.

Aside from good rental returns, the lack of houses and flats to rent in St John's Wood is also contributing to higher property prices, as competition between investor landlords intensifies in a bid to plug the rental housing shortage in the area.

 

Adam Feather, managing director of local estate agents Robert Anthony, said: "The continuing imbalance in demand and supply has created a competitive market in St John's Wood where many properties receive multiple offers and subsequently prices are pushed up."

Of course, it is not just St John's Wood that is attracting enormous investor demand.

High demand for rental homes in surrounding areas from people looking for a flat or house to rent in Regents Park, Primrose Hill, Baker Street, Swiss Cottage and Finchley Road, among other highly desirable local areas, is also proving alluring for investors. But with supply highly restricted, competition among homebuyers is fierce.
 

 

"Clearly, both owner-occupiers and investors are unwilling to part with what may well be the only asset they hold that is actually increasing in value," said Andrew Ellinas of leading estate agents Sandfords.

Until there is a notable rise in the supply of homes coming onto the sales and rental markets, property values will almost certainly continue to increase further, making it even harder for first-time buyers to gain a foot on the housing ladder.

Prime Central London Property Prices Continue to Rise

London's 'safe haven' status is continuing to attract a higher number of homebuyers from across the world, which is placing greater pressure on the city's acute housing supply crisis, pushing property prices higher in the process.

The situation is most acute in the heart of the capital, with the average price of a home in central London now 13 per cent above the previous market peak in early 2008, according to Knight Frank. This reflects high buyer demand coupled with a severe shortage of property for sale in Marylebone, Mayfair, Kensington and Fitzrovia, amongst other sought-after areas.

"London still remains a key destination for investors looking for 'safe-haven' assets, a fact reflected in the continued rise in interest from prospective buyers, up 23% in the three months to July compared to the previous quarter," said Liam Bailey of Knight Frank.

Increasing the supply of new build properties is central to dealing with some of the major problems facing the housing system; government has a critical role to play in enabling home builders to meet the country's housing need, particularly in central London.

For example, any house hunter searching for a house for sale in Mayfair or a flat for sale in Fitzrovia will find that there is very little stock on the market and this is underpinning prices in central London.

Jennet Siebrits, Head of Residential Research at CBRE, said: "London is still a bright spot in the UK residential market with a lack of supply and strong interest from international buyers looking for a safe haven for their money underpinning house prices."

A recent report compiled by property consultants CBRE shows that over the last decade London's population has grown by 850,000 whilst only 197,000 new homes have been constructed in London over the same period.

Reflecting on the growing supply-demand imbalance in the capital. Andrew Ellinas, Director of leading central London estate agents Sandfords, said: "The property market in central London is continuing to motor away from the rest of the UK."

The rise in property prices is also rippling out to leading secondary locations, such as St John's Wood. 

Located a short walk from Baker Street, St Johns Wood is considered to be one of the most popular neighbourhoods to live in London. It generally attracts a high level of demand from homebuyers - reflected by the lack of houses and flats for sale in St Johns Wood - making it one of the most expensive places to buy property in the UK.

It does not take a property expert to realise that prices in the capital are likely to rise unless more new homes are built in the foreseeable future.

The latest Housing Market Sentiment Survey from Zoopla.co.uk reveals that 63 per cent of homeowners expect house prices to rise between now and the end of 2012. This time last year, only 57% of homeowners expected an increase in property prices in the second half of the year.

"Homeowners evidently feel that there are some grounds for optimism, despite the backdrop of slow economic growth and tight mortgage lending," said Nigel Lewis of Zoopla.co.uk.

The Prices of Houses and Flats for Sale in Fitzrovia Soar

The residential property market in prime central London remains strong, with prices having appreciated significantly across many parts of the region so far this year, with rental values also rising, due to high demand and low housing supply.

As sales prices continue to increase, it is getting harder for would-be homebuyers to secure finance to buy property in central London, forcing many people into rental accommodation instead, pushing rental values higher in the process.

Robert Bartlett, Chesterton Humberts' CEO, says: "The prime London residential lettings market is facing a variety of challenges this year and in spite of the ongoing economic gloom, overall rents are continuing to increase. Good quality rental properties are being let at record prices and in record time."

One area where the housing market is going from strength to strength is Fitzrovia, near London's West End, which is home to an array of upmarket properties and various celebrities.

 

 

A limited supply of houses and flats for sale in Fitzrovia, in stark contrast to a high level of demand, has pushed property prices higher in the area, driven primarily by a growing influx of overseas buyers.

"The London property market continues to be seen as a safe haven in turbulent economic times, with record numbers of properties being sold to international buyers," said Ed Mead, sales director, Douglas & Gordon.

Demand is also being fuelled by more property investors looking to add to their property portfolios, thanks to the fact that many people are looking at property to rent in Fitzrovia, thanks to its close proximity to London's West End, along with a wide selection of local attractions and amenities.

 

Andrew Ellinas, director of Sandfords, says that the "the Fitzrovia lifestyle" appeals to many people attracted to "art galleries enthused with vibrant bars, outstanding restaurants, famous landmarks like the BT Tower, the open spaces of Regents Park and the fashionable boutiques of Marylebone High Street".

Whether flats or houses to rent in Fitzrovia, good quality properties rarely stay on the market very long, as tenants snap them up amid fierce competition for sought-after homes in the area. This is creating a severe supply-demand imbalance that is unlikely to change until more new homes are developed, in light of London's rising population.

 

 

The Institute for Public Policy Research (IPPR) reports that England is facing a "growing housing crisis", with an estimated shortfall of 750,000 homes by 2025.

Nationally, the think tank says that up to 280,000 new homes are required each year over the next 16 years, with the biggest requirement in London, particularly popular areas like Fitzrovia.

Unless property supply increases in the near future property prices and rents are likely to rise further, regardless of the state of the economy, as housing remains a necessity that we all require.

"Whether the economy performs well or poorly, a serious gap looms between housing supply and demand," said IPPR director Nick Pearce. "Our ageing population and rising expectations for living standards are going to drive up demand, but if there is no change in housing policy it will seriously hold back supply."

Homebuyers looking to areas beyond Central London

Central London estate agents have reaped the rewards from a surge in property values in recent years, propped up by low interest rates and international buyers.

"Since the depth of the property bust in 2009, prices in England and Wales have floated up by a gentle 11.2 per cent but flats in Central London have rocketed ahead," said Andrew Ellinas, director of leading estate agents Sandfords.

The average price of a residential property in prime central London has increased by 35 per cent since 2009, with greater growth anticipated in the short to medium term, according to CBRE.

Mark Collins, head of residential, CBRE, said: "Superprime residential markets have emerged as one of the only secure investment options for the world's super wealthy. The very top-end of the market remains exclusive, involving only a handful of cities, and within this elite group London is still one of the most compelling choices."

But while many homebuyers continue to snap up properties in central London, others are now looking beyond the heart of the capital to second-tier markets – searching properties for sale in Little Venice, Maida Vale, Swiss Cottage and Camden, among other popular areas. 

Although some home purchasers are buying property to live in, demand is being significantly boosted by a rise in activity among property investors seeking to capitalise on good prospects for capital growth and high rental returns.

"London is seen as a sound investment, with prices continuing to rise in good locations," said Ingrid Skinner of developer Taylor Wimpey. "This has seen investors … spreading beyond the super-prime market to areas that offer good rental returns in solid residential areas."

It is unsurprising that more property investors are targeting homes in London, given that rents, currently at an all-time high in the capital, continue to rise.
 

The average rent in London increased by 0.6 per cent to £1,038 per month in May, surpassing the previous high of £1,033 in November, according to latest buy-to-let index from LSL Property Services. This compares with an average of £712 per month in England and Wales.

David Newnes, director of LSL Property Services, said: "The end of spring has brought with it renewed activity in the rental market, and rents have returned to the level seen before the impact of the stamp duty deadline [in March 2012] rush by first time buyers … strong tenant competition is pushing up rents as a result.

High rents and rock-bottom savings rates are preventing many people from being able to save for the larger deposits banks now require to buy property. Consequently, fewer tenants are able to leave the rented sector.

But it is not just involuntary renters that are adding to demand, particularly in sought-after areas. Many would-be homebuyers are opting to rent as they adopt a wait-and-see approach to the property market in-light of the recession and wider eurozone crisis. 

This means that the high number of people looking for a house or flat to rent in Little Venice, Maida Vale, Swiss Cottage and other desirable areas, is unlikely to wane anytime soon.

High Demand for Property for Sale in Fitzrovia

Despite the economic crisis and eurozone woes, the booming property market in London shows very few signs of slowing, particularly in prime central London were property prices are at a record high.

The latest data produced by CBRE shows that the average price of a home in prime central London has appreciated by 35 per cent over the last three years and is now 16 per cent above the 2007 peak.

Furthermore, the property group estimates that the average price of a home in the heart of the capital will appreciate by six per cent this year in stark contrast to the rest of the UK.

The property market in London is ultimately being supported by rising demand from national and international homebuyers, while housing supply is being restricted by a lack of new build homes. This has created a shortage of property for sale in Fitzrovia, Chelsea, Kensington and Marylebone, among other desirable places in London. 

 

"An acute stock shortage and unprecedented buyer demand in prime areas is helping to underpin prices by as much as 10% in the last 12 months as many buyers compete to take advantage of excellent yields and prospect for strong capital growth," said Andrew Ellinas, Director of Sandfords.

Family homes are generally the most desirable properties in London, which will explain why there are very few houses for sale in Fitzrovia or Chelsea, or any other sought after area with easy access to top schools, established infrastructure and excellent transport links. 

 

"London's time-zone, infrastructure, education system and the language help make it the top choice location for a trophy asset," said Mark Collins, head of residential, CBRE.

He added: "London's limited source of developable land means that supply will almost never satisfy demand."

Nevertheless, flats for sale in Fitzrovia and other desirable areas are also in great demand, from both owner occupiers and property investors seeking to cash-in on high tenant demand and rental values. 

 

 

 
According to Homelet, tenants in London are now paying an average of £1,187 a month to rent a home, which is much higher than those living in rented homes in other parts of the UK who are paying an average of £653 per month in rent.

HomeLet's Managing Director, Ian Fraser, explained: "There's been a steep increase in the number of young people and families renting a home due to being unable to secure a mortgage."

Unsurprisingly, with rents rising, more landlords are adding to their residential property portfolios, research by Paragon Mortgages shows.

According to the specialist buy-to-let mortgage lender, during the second quarter of 2012, landlords' property portfolios increased to an average of 14.1, down from 12.9 in the first quarter of this year. This is also an increase on the second quarter of 2011 when the average portfolio size was 12.5 properties.

A fifth (21 per cent) of landlords who took part in the quarterly Private Rented Sector (PRS) Trends Survey, said that they were planning to add to their portfolios during the third quarter.

John Heron, Managing Director of Paragon Mortgages, said: "The fact that landlords are planning to make further investments in their property portfolios is positive news. It shows their appetite to grow their business to meet the on-going demands from tenants and demonstrates the viability of the UK's PRS."

Demand for Property to rent in London Continues to Soar

Now is a generally good time to be a landlord in London. Tenant demand is rising at a rapid pace while the supply of residential properties coming into the market remains historically low, pushing rents higher in the process.

The housing shortage is owed in part to the lack of new build homes coming onto the market. Residential property construction levels are at their lowest level since the 1920s, and this trend is expected to continue for the foreseeable future.

Furthermore, tight mortgage lending conditions are denying many people the opportunity to buy property, forcing them into rental accommodation instead.

Unsurprisingly, landlords are vying against one another to take advantage of favourable market conditions and add to their property portfolios.

A study by independent researchers BDRC Continental revealed that during the first three months of this year, landlords increased their portfolio size by an average of 1.8 properties. Yet of those landlords that took part in the survey, 20 percent said that they would seek to buy another investment home within the next 12 months.

David Salusbury of the National Landlords Association said: "Early signs of increasing property acquisition suggest that landlords are feeling more confident about future prospects of the buy-to-let market."

Fierce competition for homes in London means that rent costs tenants an average of 40 per cent of their net income, with 16 per cent of renters in the capital paying more than 60% of their take home pay, according to Rightmove's latest consumer confidence survey.

Demand for property to rent in London is generally greatest in primary areas in boroughs like Westminster, Kensington and Chelsea as well as Hammersmith and Fulham. 

Robert Bartlett, CEO of Central London estate agents Chesterton Humberts, comments: "The prime London residential market continues to outperform the UK property market."

Leading estate agents Sandfords report that Marylebone is currently one of the most sought-after areas to live in the capital, reflected by the lack of property to rent in Marylebone in relation to demand. 

"Prices are high and supply short in prime Marylebone", said Sandfords' Andrew Ellinas. "For those looking to secure their offspring in good educational establishments, Marylebone has well regarded business schools, increasing its popularity with people from the UK and overseas."

Fierce competition for homes in the capital means that high rental demand is also rippling out to secondary areas.

"Agents report that the seemingly incessant demand is causing rental price pressure to spill over into other previously less sought-after areas," said Rightmove director Miles Shipside.

With the private-rented sector playing an increasingly important role in the provision of housing, John Heron, director of Paragon Mortgages, says that he is not surprised that landlords are benefitting from attractive investment conditions in the market.

"There is still a long way to go to meet the increasingly high level of tenant demand," he said. "More investment across the private rented sector is needed during the coming year to help to meet this demand."

St John's Wood Property Market Remains Buoyant

Whether renting or buying a property in London, St John's Wood remains one of the most desirable places to live in the capital, reflected by the fact that it is home to some of the most expensive properties in the world.

This prosperous part of North West London, in the City of Westminster, only a 15 minute walk from Baker Street and London's West End, features a high proportion of independent retailers and offers easy access to the open green spaces of Primrose Hill and Regent's Park. It is also the location of the famous Lord's Cricket ground and Abbey Road Studios, where The Beatles recorded their Abbey Road album.

St John's Wood estate agents report that property prices in and around St John's Wood have continued to soar, despite the global economic uncertainty, eurozone woes, and the recent hike in stamp duty at the upper end of the market to seven per cent.

Liam Bailey, head of residential research at Knight Frank, commented: "Early indications of the impact of the recent changes to stamp duty are that the market is so far proving resilient."

According to a new Knight Frank survey, home values in prime areas such as the Borough of Westminster, increased by 1.1 per cent in April and are now 11.4 per cent higher compared to the corresponding month last year.

Andrew Ellinas, director at Sandfords Central London estate agents, said: "In 2011, Westminster and Camden together accounted for more £1 million plus properties than Kensington and Chelsea - most of them in Sandfords' domain of Marylebone, Regent's Park and St John's Wood."

Demand for properties in St John's Wood is being primarily fuelled by a growing influx of foreign purchasers taking advantage of a historically weak pound, which has actually reduced the cost of buying property in the UK for some foreign buyers, making central London a particularly sound property investment option.

"Many [overseas property buyers] are looking for a safe haven asset class to take their money away from the turbulence of the eurozone and the Arab Spring," said Naomi Heaton, chief executive of London Central Portfolio.

As well as high demand from property buyers, there has also been a shift towards more people looking at property to rent in St John's Wood as a preferred lifestyle choice; an attractive proposition for property investors.

The high level of rental demand is reflected by the shortage of houses and flats to rent in St John's Wood, with most properties often let within days of being placed onto the rental market.

Strong tenant demand is expected to push rents up by an average of five per cent in 2012, following an average gain of 12% in 2011, with further growth anticipated moving forward, according to property consultants Jones Lang LaSalle.

London's population has grown every year since 1988, and it is likely that it will continue its steady growth over the next few years, further fuelling demand for rental accommodation in St John's Wood and its surrounding areas, including Hampstead, according to various Hampstead estate agents.

"There are likely to be 150,000 more London households renting [by 2015] than before the financial crisis," said Jones Lang LaSalle's research director Jon Neale.

Managed Rental Homes in Central London are Highly Sought-After

With property prices and rental values continuing to rise, Central London estate agents have seen a surge in the volume of landlords actively buying properties in prime London in order to take advantage of attractive rental returns.

Fresh research by specialist buy-to-let lender Paragon Mortgages shows that property acquisition activity in the UK remained strong in the first quarter of 2012, during which period landlords increased their portfolio size by 1.8 properties, with prime central London by far the most popular place to buy property.

John Heron, Director of Paragon Mortgages, commented: "It has been a steady and progressive start to 2012. Whilst landlords are still benefitting from attractive market conditions, there is still a long way to go to meet the increasingly high level of tenant demand. More investment across the private rented sector is needed during the coming year to help to meet this demand."

The greatest supply-demand imbalance can undoubtedly be found in the heart of the English capital, partly because property prices remain out of reach for many would-be homebuyers, while mortgage finance is still hard to access for some, particularly first-time buyers, pushing more people into rental accommodation instead.

Unsurprisingly, 46 per cent of private rented sector investors are considering adding to their London portfolio in the next 12 months, according to the latest Young Group Index.

With rental demand and values soaring, Neil Young, chief executive of Young Group and Young London said that investors appear to be more committed to the London market than ever before.

"Confidence in the asset class remains strong, particularly for property in the capital where investors see future tenant demand as virtually guaranteed," he said.

But with rising rents comes greater expectations from tenants.

Despite the existing high level of demand for homes, landlords who are uncooperative and offer shabby properties will generally not be tolerated by most tenants who are now being forced to pay record high rents.

It is all very well adding to a property portfolio, but a landlord needs to take on the increased responsibility, which often proves far too time-consuming for many property investors, especially for part-time or temporary landlords.

Consequently, more property professionals with properties in and around Central London are now turning to London property management firms to provide professional organisation, according to Adam Feather of Robert Anthony estate agency.
 

"Many landlords now realise it makes more sense to hire the services of a property managing agent in order to help maintain their property and keep tenants happy, as well as reduce void periods and maximise rental returns," said Feather. 

Healthy property investment appetite in Prime Central London means that it is not just rents that are rising. High demand for homes in prime locations, including houses and flats for sale in Marylebone, Chelsea, Notting Hill, Kensington and Mayfair, among others, are generally expected to push micro property prices upwards.

According to the latest Young Index, property values in London are expected to increase by an average of 2.2 per cent between now and the first quarter of 2013, whereas investors predict that values across the rest of the UK will fall by 0.4 per cent over the same period.

Significant capital growth in recent years means that London now accounts for the vast majority of £1 million plus homes in the UK. 

"London accounts for two thirds of all UK sales above £1 million with 4,329 transactions in 2011 compared with 2,582 in the rest of the country," said Andrew Ellinas, Founder of leading Central London estate agents Sandfords.

Despite wider concerns about the economy, indications are that the property market in Central London will remain resilient and continue to go from strength to strength.

Demand For Rental Property Remains Firm

Almost half of the landlords - 44 per cent - surveyed in Paragon’s latest Private Rented Sector Trends survey for the first quarter of 2012 said that tenant demand was continuing to grow.

The results of the quarterly survey carried out by the specialist buy-to-let lender also revealed that just seven per cent of landlords thought that during Q1 tenant demand declined and 46 per cent said that levels remained stable.
Moving forward, 53 per cent of landlords surveyed believe that demand for rental accommodation will continue to grow and 36% said that it will stabilise.

"Levels of tenant demand have for the most part remained steady throughout the first quarter of the year. This shows the continuing importance of the private rented sector as the tenure of choice for many people," said Nigel Terrington, chief executive of Paragon Group.

Demand is generally greatest for property to rent in London, particularly sought after areas like Prime Central London, which has shown the strongest rental price growth over the past twelve months, up 3.2 per cent.

Despite an anticipated slowdown in rental price rises in the short term, a general housing shortage in the capital, including a lack of property for sale in London, is expected to underpin a hike in future rental values, on the back of an almost inevitable rise in demand, in light of stringent mortgage lending conditions.

Lucian Cook, director of Savills residential research, said that his firm have identified a clear link between FTSE volatility and rental values in central London and this pattern has been "compounded by reduced corporate budgets."

But although in the short term the prime rental markets in London and the South East will be highly dependent on sentiment in London's financial and business services sector, Savills "expect values to be underpinned by constrained stock levels, particularly in the core prime sector," said Mr Cook.

There is a particular shortage of property to rent in Marylebone, Mayfair, Chelsea, Kensington, among other prime central London locations.

"Marylebone, with its wealth of elegant properties and desirable High Street, has been attracting affluent people for a number of years. Demand for properties is intense," said Andrew Ellinas, director of leading estate agents Sandords.

But while London's super prime property markets and prices continue to strengthen, the city’s second-tier markets are also growing increasingly popular with overseas investors, due to greater tenant demand, according to Ingrid Skinner, managing director of house builder Taylor Wimpey in Central London, who recently returned from Hong Kong to promote homes in London.

Skinner remarked: "Boroughs such as Camden, Highbury and Islington, the Royal Borough of Kensington & Chelsea and Hammersmith and Fulham can be seen to be prudent investments. Entry level pricing is lower and rental demand continues to be strong and the excellent transport links mean that purchasers own a property that is still very much in Central London."

Demand is particularly strong for property to rent in Primrose Hill, which is located in the London Borough of Camden, a short-distance from London’s West End.

But anyone looking at houses and flats to rent in Primrose Hill will find little choice available, and until the level of new homes coming onto the market starts to increase, this situation is unlikely to change anytime soon, pushing local rental prices higher.

Central London property management services are highly sought-after

Investment in buy-to-let properties is growing more popular, particularly for people aiming to augment their pensions or beat poor returns on their savings in the bank. Investing in buy-to-let property can prove an excellent way to make money, particularly in the current climate, with demand at an historic high.

The latest monthly survey from lettings firm LSL Property Services shows that average rents increased by 3.5 per cent in February compared to the corresponding month last year, and look set to rise further in the medium term.

David Newnes, a director of LSL, commented: "Tenant demand is underpinning rental inflation."

However, many people fail to appreciate that becoming a landlord or expanding a property portfolio comes with added responsibility. Effective property assistance is essential, but can prove time consuming, especially for part-time or temporary landlords. A lack of professional organisation can leave some tenants paying high rental prices when securing a property to rent in London, but receiving an inadequate property management service in return.

Is it worth paying for a Central London property management firm to professionally manage a property?

Well, it seems that a growing volume of landlords seem to think so.

"Times are changing and fewer tenants are prepared to put up with bad housing conditions or poorly managed properties", said professional London-based landlord, Reiss Degale.

Mr Degale currently owns 16 homes in London and is regularly looking at property for sale in London with a view to adding to his property portfolio.
According to a survey by property investment specialists Assetz, over three quarters - 76.8 per cent - of UK property investors are considering buying additional investment properties over the next 12 months, in order to take advantage of growing rental demand and yields.

"The yield a landlord's rental property generates is a key indicator of how well the property is performing and is an essential part of the landlord's overall business plan," said John Heron, managing director of Paragon Mortgages.

Like Degale, many more landlords are now taking their residential investments far more seriously by adopting a professional approach to renting, particularly when offering houses to rent in Primrose Hill, Marylebone and Chelsea, among a host of other primary areas in the capital.

Phil Jones of Robert Anthony estate agents remarked: "More landlords appreciate the benefits of providing their tenants with a professionally managed property service. This is due to the fact that they recognise that a property is a major asset that must be carefully managed in order to maximise returns."

A number of Central London estate agents offer a property management service, including leading letting agents Sandfords.

The company report that a growing number of high-end private tenants expect a round the clock service when they rent a home in London and as a landlord it can be difficult to live up to their expectations."

Sandfords states: "To get the best return on their investment in the fiercely competitive London premium lettings market, landlords must offer their tenants the highest levels of service."

Properties in St Johns Wood and Primrose Hill growing increasingly popular

The expensive prices of homes in central London are leading more buyers to seek alternative addresses to get more for their money. With average prices slightly cheaper, some people have started moving away from prime central London to surrounding regions on the edge of the city centre, reflected in greater demand for property for sale in St Johns Wood and Primrose Hill.

Trevor Abrahmsohn of Glentree Estates said: "30 years ago, St John's Wood was the first leafy suburb outside the Mecca of the West End, with its glittering array of shopping facilities. If you wanted to live in North West London proximity to the West End was crucial and St John's Wood provided an excellent, yet expensive, place to live."

Thirty years later and very little has changed as far as demand for homes in St Johns Wood and Primrose Hill is concerned.

The one thing that all Primrose Hill estate agents have in common is a lack of stock to cater for the high number of applications registering to buy homes in Primrose Hill.

Houses for sale in Primrose Hill are like gold dust in that there are very few on the market at any one time, regularly pushing up property prices in the process.

Andrew Ellinas, director of leadig estate agents Sandfords, said: "Property prices have now risen by nearly 40 per cent since the post-credit-crunch low in March 2008, bringing prices well above the 2008 peak. Restricted supply makes it very likely the trend will continue."

In fact, given the existing shortage of homes in relation to demand, almost any property for sale in London is currently likely to attract a high rate of attention from homebuyers. This is reflected in the fact that the level of transactions in the residential property market hit an 18-month high in February, according to the Royal Institute of Chartered Surveyors.

Alan Collett, housing spokesman for RICS, said: "With the recent upturn in activity … it seems that a renewed sense of optimism may be slowly returning to the property market. Chartered surveyors' price predictions were more optimistic in almost every area of the country in February."

It is not just the property sales market that is booming in the capital. Many would-be purchasers cannot gain a foot on the UK housing ladder due mainly to stringent mortgage lending conditions, forcing them instead to look at property to rent in London; an attractive proposition for landlords, many of who are benefiting from higher rental returns.

Unsurprisingly, the latest quarterly survey of Private Rented Sector investors carried out by the Young Group shows that London remains the most desirable place to own a buy-to-let investment. A total of 85.1 per cent of respondents to the survey said that they expect rents in the city to continue to rise throughout 2012.

Adam Feather, senior sales negotiator at Foundation Estates, commented: "Low availability of rental homes in the capital has meant that landlords are experiencing fewer void periods and higher rents. Rental values in London have risen significantly in recent years; increasing by about 11 per cent in 2011, with further growth anticipated this year."