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."
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