The private rental market in London is set for enormous change and growth.
A new report from Cluttons says that with a growing proportion of London households living in private rental accommodation, tenants will find themselves renting for longer, often well into the family-rearing stages of their lives.
The property firm says that as a result, the higher pace of rental growth will make the private-rented sector an increasingly attractive investment opportunity.
But the report also says that demand for homes in London will rise over the next decade, and will not be matched. The report says there is no sign of the supply side being able to match future demand, and that both rents and house prices will rise.
Since 2000, an extra 400,000 jobs have been created in London, says Clutton.
There are now more people employed in the capital than at the 2007 economic peak. The report argues that employment is expected to rise further over the next decade but jobs growth will be held back by a lack of housing.
Private renting in the capital has already doubled in the last 20 years, it says.
Julian Briant, head of residential consultancy division at Cluttons, said: “Decision makers have to question whether London’s potential to maintain its position as a world city is being curtailed by such a limited supply of housing stock. The answer can only be yes.
“Despite this, a growing and vibrant London offers a wide range of residential opportunities for both investors and developers. Small private landlords will continue to play an important role in the capital, including creating more units from the existing stock.”
The research paper, ‘Renting in London: the coming boom’, was written on behalf of Cluttons by Professor Michael Ball from Henley Business School at the University of Reading.