The cost of renting in London is expected to sharply rise by the end of the year, Greg Tsuman, managing director for lettings at Martyn Gerrard Estate Agents has warned.
This is due to the lack of supply to meet demand.
The average rent in London stands at £2,252, a 7.3% increase over the past 12 months.
Tsuman said: “The signs on the ground suggest that the recent trend of slowing rental inflation is about to shift dramatically, and I advise renters to act now to secure properties ahead of a likely sharp rise in prices by the end of the year.
“The level of demand to the supply of rental properties is extremely imbalanced. I’m increasingly concerned that we could see a return to the sharp increases we experienced in 2022 as a result of many landlords leaving the market.
“The fundamental pressures behind the last rental crisis have not abated. Section 24 of the Finance Act continues to penalise landlords financially, interest rates remain elevated, and burdensome legislation shows no signs of easing. Meanwhile, demographic trends are exacerbating the problem: a growing cohort of ageing landlords is exiting the market, with fewer younger investors stepping in.”
Section 24 of the Finance Act refers to the elimination of mortgage income tax relief, which means landlords are effectively taxed on their income, rather than profit.
Tsuman added: To compound matters, the uncertainty surrounding the Renters Rights Bill and the wider economic climate could push many small-scale landlords out of the sector altogether.
“This risks leaving the market dominated by large, low-leverage corporate entities, which inevitably drives rents even higher.”
“Institutional players may gain in the short term. But tenants won’t, and neither will the taxpayer, when rising rents inflate the housing benefit bill. No one wants to see the crisis conditions of 2022 return – including agents – yet I fear that’s exactly where we’re heading.”