Demand for rental properties remains high nationwide

Many would-be property purchasers are being forced to remain in rental accommodation for longer because they are struggling to raise the necessary deposit needed to access the best mortgage deals to buy a home.

According to research commissioned by furniture rental specialist Roomservice by CORT, over 80 per cent of tenants in the capital are being priced out of the housing market when their lease expires as the average time spent renting in London is now 57 months.

The study reveals that over half of London’s renters are actively saving to purchase a home, but eight out of ten will be unable to actually buy once their current tenancy agreement comes to an end.

Roger Hollis, managing director of Roomservice by CORT, said: "These results suggest that over a third of London’s renters are effectively excluded from buying their own home despite actively saving towards such a goal."

The booming rental market is encouraging more investors to enter the buy-to-let sector, and this, combined with foreign demand for the safe-haven of London, is adding to the supply-demand imbalance in the capital’s rental market.

Marc von Grundherr, the Lettings Director of Benham & Reeves estate agents, said: "Although autumn tends to quieten down a little after the busy summer months, we’re still seeing 10 or 11 applicants for every available property in some London locations."

Battersea estate agents, for example, who operate in the borough of Wandsworth, report that demand for property in the area is rising, with the supply of housing coming onto the rental market failing to keep up with existing demand.

Alex Oppenheim, manager of the Battersea branch of John D Wood & Co, says that there has been a hike in demand for properties in Battersea because the area offers greater value for money compared to other nearby desirable areas, such as Chelsea.

"During the past four years, there's been a huge rise in interest in the mansion blocks overlooking the park on Albert Bridge Road," Oppenheim said.

He added: "Battersea Square has seen great improvement. Lovely bistros have opened, and tired pubs have been revitalised-driven by the influx of young professionals."

More people, particularly parents, looking to live in this part of London are seeking property to rent in Wandsworth, mainly because of the excellent schools located in the area, with more than a third of Wandsworth's schools having been given an 'outstanding' rating by regulator Ofsted.

Demand for property to rent in Richmond, located close to Wandsworth, is also on the rise. This is unsurprising, given that Richmond is one of London’s most attractive boroughs.

Richmond, located 15 miles southwest of central London, provides a welcome break from the hustle and bustle of the capital, yet a fast train to London Waterloo will have people in central London in just 15 minutes.

It is not just in London that demand for rental accommodation is on the rise.

Whether looking at property to rent in Lymington, Hampshire, Luton in Bedfordshire or Bootle in Liverpool, research shows that rental demand is increasing across England and Wales, which is placing upward pressure on rental values.

The average rental price of a home in the in the private sector in England and Wales increased by 0.7% in September compared to the previous month, to hit a new high of £718 per month, according to recent data released by LSL Property Services, which owns various estate agents and letting agencies.

David Newnes of LSL said: "Rents continue to rise as the fundamentals continue to put upwards pressure on rents. Simply put, investment in the sector is not keeping pace with growing demand for accommodation requirements."

With demand for rental accommodation set to rise even further moving forward, the private-rented sector (PRS) will play an increasingly important role in providing homes in the UK.

David Salusbury, NLA Chairman, commented: "It [PRS] currently makes up 14 per cent of all households and we expect this to rise as people move away from homeownership towards more flexible forms of accommodation."

Housing shortage is pushing property prices higher

A fresh report from global real estate adviser DTZ shows that England is facing an annual shortfall of at least 70,000 new homes this year, despite government efforts to implement planning system reform in a bid to increase housing supply.

Chris Cobbold, head of DTZ's residential practice group, commented: "At present the government's strategy is like a two legged stool: relying on the traditional house building model and the new model of affordable housing delivery. This will not deliver the number of new homes the nation needs."

The problem is most acute in popular areas of the country, particularly in London, where demand for residential properties is greatest.

In south London, for example, there are nowhere near enough homes to satisfy existing demand, especially in some of the most desirable areas like Wandsworth, Richmond and Wimbledon.

London-based residential property developer London Square's first development at Wimbledon Village is one of only a small selection of housing developments in the area. The £30 million scheme will feature 10 houses, starting from £2 million, on the site of what was once a convent.

Adam Lawrence, chief executive of London Square, said: "There is a shortage of new homes, a shortage of skilled people who understand London and it is very capital intensive to build here."

With strong demand for property for sale in Wimbledon, Wimbledon estate agents have seen prices in many parts of the area increase in the past year, with the most expensive homes found on in Parkside, Wimbledon, where average prices stand at more than £5 million.

Estate agency chain Hamptons International is predicting that next year will experience a further price growth on the top end of the London property market of 4%.

Most Wandsworth estate agents would agree, largely due to a lack of new homes in relation to surging demand, while a weak sterling is attracting more international property investors.

"Overseas investors will be attracted to buying London property as a safe haven for investment, rather in the way that gold offers similar security," said a Hamptons statement.

Another factor driving demand for property for sale in Wandsworth, particularly among young families, is the area’s excellent schools. Over a third of Wandsworth's schools have now been given an ‘outstanding’ rating by regulator Ofsted.

Of the 80 nursery, primary, secondary and special schools and Pupil Referral Units in the borough, 30 now have the coveted status, ensuring that Wandsworth has one of the highest numbers of outstanding-rated schools in London.

Jeremy Best of John D Wood & Co. told the press that pressure for family houses in Wandsworth now is massive, particularly those located close to the area’s best schools.

"We usually have 15 to 20 applicants interested in each house, all willing to compromise on their ideal home as long as they can be sure their children will get into the primary they want," he said.

Further afield Richmond estate agents are also finding that there are not enough homes on the market, with an increasing volume of people actively looking to buy a property for sale in Richmond.

Until more new homes are delivered in south London, property prices will almost certainly rise, making it even harder to secure a home in this popular part of the capital.