Prime rents across the Home Counties increased further in the third quarter of the year as the market recovery continued, underpinned by rising demand, new figures show.
Knight Frank’s latest index reveals the cost of renting in the region rose by 1.2% between July and September, although rents are still 2.6% lower than they were 12 months ago.
Demand for rental property in the Home Counties is rising, as reflected by a 24% increase in the number of tenancies agreed in Q3 2017, compared with the corresponding period last year.
This pick-up in activity comes as higher costs associated with purchases in the sales market encourage a number of would-be buyers, especially those moving from further afield, to rent before buying property.
But rental performance remains dependent on price, highlighting the current two-tier nature of the letting market.
Flats and smaller family houses in the sub-£4,000 per month rental market accounted for 68% of activity over the course of the quarter, and tenancies were agreed faster than for properties in higher price brackets. However, above this price threshold demand is more muted.
According to Knight Frank, there was rental growth of 4.8% and 4.5% respectively for one- and two-bedroom flats in Q3, compared with average rents declining by 1.7% and 2.5% for larger four and five-bedroom houses between July and September.
Jemma Scott, partner at Knight Frank, commented: “We have seen a continued surge of interest in the Home Counties lettings market, demonstrated by the remarkable rise in demand compared to last year.
“Renting is now the go-to approach for families moving out of London as it gives them the ability to make sure they are settled before committing to the considerable costs associated with buying a property.
“That being said, the high volume of one and two bedroom flats that are being snapped up shows that younger couples and smaller families are also being attracted by the lifestyle that the Home Counties has to offer.”