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London rental growth reaches highest point in three years

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Rental values in London were flat in December, following a similar trend in the previous month as the year wound to a close, according to a new report from Knight Frank.

However, even with the impact of dampening global economic uncertainty, the actual annual increase in rental values stood at 3.3 per cent - hitting the highest rate in the past three years.

"Annual growth has been climbing steadily since July as the UK economy improves and some buyers switch to the rental market while political uncertainty surrounds the outcome of the general election and the prospect of further property taxes remains," Knight Frank explained.  

The report went on to explain how even though economic indicators have seen improvement in the UK, there was still caution in the final quarter of 2014 - largely attributed to falling oil prices and the Chinese economic outlook, along with the euro zone.  

In turn, this could mean that both companies and individuals are likely to want to wait for clarity - thus postponing any decisions.  

However, even with global economic uncertainty London continued to remain a sound investment.

"Total returns, which include rental income and capital value growth, outperformed a series of other asset classes in the year to November, proving its resilience as an investment," Knight Frank stated.  

"While commodity prices have fallen markedly, partly due to concerns over the Chinese economy, demand among Chinese tenants and buyers for prime central London property has increased, buoyed by its safe haven appeal."

This rental growth should certainly give confidence to those planning to invest in rental properties this year, although it's going to be necessary to conduct the necessary appraisals.  

Date Published: 18 Jan 2015
Category: News

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