London rents rise as property prices fall

London landlords have seen rents rise while house prices have fallen, according to research covering January to July.

Yet in three of the capital’s boroughs, rents outperformed property prices simply by falling more slowly.

Across the capital, average private rents increased by 0.47% a month, while house prices dropped by 0.10%.

Estate agents Benham and Reeves compared average monthly growth rates over the period and found that rents outpaced house prices in 26 of London’s 32 boroughs.

Landlords face legislative pressures

A director of the firm, Marc von Grundherr, said: “London’s sales market has faced a challenging year, with house prices cooling across many boroughs as buyer demand has remained subdued.

“In contrast, the rental market has largely gone from strength to strength, underpinned by the fundamentals of high tenant demand and limited available stock.”

He added: “This is particularly welcome news for London’s landlords, who have endured a turbulent year as they navigate the implementation of the Renters’ Rights Act and the additional pressures it brings.

“While the legislation has undoubtedly created new challenges, it’s important not to lose sight of the strength of the underlying rental market.”

Falling rents outperform prices

Westminster recorded the largest average monthly house price decline, at 1.27%, while rents fell by 0.01%.

Rents also dipped in Kensington and Chelsea and Lambeth, although both boroughs saw larger falls in property prices.

The average monthly rent decline in Kensington and Chelsea was 0.05%, compared with a 1.06% reduction in house prices.

In Lambeth, rents fell by 0.01% a month, against a 0.27% decline in property values.

Camden leads rent growth

Among the 23 boroughs where rising rents outpaced house price growth, Camden recorded the strongest average monthly rent increase at 1.16%, despite property prices falling by 0.13%.

Islington also recorded rising rents alongside falling house prices, as did Brent and Hammersmith and Fulham.

Only six boroughs saw house prices outperform rents: Barking and Dagenham, Kingston upon Thames, Barnet, Ealing, Bexley and Havering.

Barking and Dagenham led those six with average monthly house price growth of 0.82%, compared with a 0.15% increase in rents.