The rising cost of living is forcing many London tenants to downsize. As a result, the competition for one-bedroom flats is fierce, according to property consultants Cluttons, as couples and singletons alike are looking for one-bedroom apartments.
Almost half of landlords are planning to increase rents by at least 4% this year, as rising inflation and VAT and an expected interest rate rise take their toll on property owners.
Rental costs have fallen for the first time since January 2010, according to the latest Buy-to-Let Index from LSL Property Services. Rents fell fastest in Wales, down 2.6 per cent, while other areas of the UK were similarly affected.
Despite high tenant demand, above average rental growth in 2011 is unlikely, as worries about rising unemployment will put a cap on the amount landlords can charge, according to the latest report from Capital Economics.
Private tenants should allow for a rent increase in their 2011 budget, with four in ten landlords planning to up their rates in the next 12 months.