Rental growth has returned to the prime central London market, as demand for smaller rental properties continues.
Demand is up for smaller properties in prime central London, with studio apartments seeing 7% rental growth in the year to November 2017.
Likewise, newly-furnished 'turnkey' rental units also continue to see high demand, with rental growth of 6.4%.
According to a study carried out by the London Central Portfolio (LCP), the prime central London lettings market is showing signs of stabilising, with rents up 3% year-on-year.
Rents have been falling since the additional 3% stamp duty surcharge was introduced in April 2016, as the amount of rental stock increased. But in the final quarter of 2017, stock levels are falling, leading to rent increases.
Of the growing demand for smaller properties, Naomi Heaton, Chief Executive at LCP, said: "It is becoming increasingly clear that tenants are looking for smaller and smaller properties as they seek central locations offering an easy commute to work or university at affordable prices."
She continued: "Whilst larger three plus bedroom flats have also seen growth, this is compensating for a prolonged period of falls with rents still below where they were in May 2011".
With demand for smaller rental properties continuing, those looking to invest in prime London's buy-to-let market should bear this in mind.
These results are largely positive for landlords, with further rental increases possible. If stock levels continue to fall as we head into 2018, landlords will be in a better position to negotiate rental increases.
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