Mortgage borrowing rates have declined substantially in the past few weeks, with some two-year fixed rate deals available at just 1.99%, on the back of the Bank of England's Funding for Lending Scheme, which allows finance giants to borrow up to £60 billion at a low interest rate on the condition that it is loaned to homebuyers and businesses.
But despite cheaper mortgage borrowing rates, many first time buyers are still unable to raise the large deposits required to buy property, particularly in London, where property prices are the most expensive in the UK.
Many would-be homebuyers have therefore been forced to focus on renting property in the capital, with highly desirable areas naturally attracting the most interest. Little Venice in Maida Vale, west London, very much falls into this category.
Little Venice, located in south Maida Vale, is one of London's prime residential areas and offers residents and visitors plenty to see and do. Aside from the local canal, it is renowned for its shops and restaurants, as well as the Canal Cafe Theatre, the Puppet Theatre Barge, the Waterside Café and the Warwick Castle pub. A regular waterbus service operates from Little Venice eastwards around Regent's Park, calling at London Zoo and on towards Camden Town.
The area's attractions and scenic setting has helped to fuel demand among those seeking a flat or house to rent in Little Venice, pushing rents higher in the process.
But despite cheaper mortgage borrowing rates, many first time buyers are still unable to raise the large deposits required to buy property, particularly in London, where property prices are the most expensive in the UK.
Many would-be homebuyers have therefore been forced to focus on renting property in the capital, with highly desirable areas naturally attracting the most interest. Little Venice in Maida Vale, west London, very much falls into this category.
Little Venice, located in south Maida Vale, is one of London's prime residential areas and offers residents and visitors plenty to see and do. Aside from the local canal, it is renowned for its shops and restaurants, as well as the Canal Cafe Theatre, the Puppet Theatre Barge, the Waterside Café and the Warwick Castle pub. A regular waterbus service operates from Little Venice eastwards around Regent's Park, calling at London Zoo and on towards Camden Town.
The area's attractions and scenic setting has helped to fuel demand among those seeking a flat or house to rent in Little Venice, pushing rents higher in the process.
But high rents have persuaded many property owners to remove their flats and houses in Little Venice from the sales market and let them out instead. This is actually now placing downward pressure on rental values in the area; welcome news for tenants looking for a house or flat to rent in Little Venice.
"Unfortunately, the upsurge in properties coming onto the rentals market has meant that rents are now under pressure," said Julia Garber of Maida Vale estate agents Sandfords. "Tenants are demanding more realistic rent levels."
Little Venice is not the only area to see rents come under pressure, despite attracting high demand from renters.
Rents in December fell for the second month in a row as landlords, according to the latest Buy-to-Let Index from LSL Property Services.
A survey conducted by LSL, which owns letting chains Your Move and Reeds Rains, found that the average rent in England and Wales fell by 0.9 per cent in December to £734 per month, based on an analysis of 18,000 properties.
Although falls were led by decreases of 1.7 per cent in eastern England and the North East, they were closely followed by London where rents fell by 1.5 per cent,
"Tenants were in a stronger bargaining position as landlords reduced rents to fill empty properties in the slower winter months," said David Newnes, director of LSL Property Services.
But as the New Year progresses the underlying weakness in the mortgage market will mean competition will heat up once more, helping to eventually push rent higher once more.
He added: "While rates are coming down for those with large deposits, extremely low saving rates are hitting those still trying to pull together a deposit – a problem accentuated by the record low base rate."
With rental values widely expected to rise again, there are emerging signs that more landlords are seeking to take advantage of favorable market conditions by adding to their buy-to-let portfolios.
The most recent figures from the Association of Residential Letting Agents (ARLA) show that rental properties continue to be an attractive investment for landlords.
ARLA research found that the average number of buy-to-let properties owned by landlords peaked at eight in the final quarter of 2012, up from seven at the beginning of the year.
Ian Potter, managing director of ARLA, said: "The latest data from ARLA suggests that landlords are carefully but concertedly increasing their portfolios; activity is returning to the buy-to-let market."
Bob Pannell, chief economist at the Council of Mortgage Lending, reports that many property professionals are feeling more positive about the UK housing market and wider economy than a year ago, despite economic headwinds and downside risks.
"House purchase activity was robust in the fourth quarter, on the back of better mortgage availability and pricing, and we expect this to continue over the coming months," he said.
As demand from homebuyers return and the Funding for Lending Scheme gains momentum, it presents investors with a real opportunity to secure a long-term, low-risk property investment. But for many would-be homebuyers, the rental market remains the only option for now.
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