Central London Home Rents Fall in January as Financial Service Jobs Vanish
Residential rents declined 0.2 percent in January from December and 0.6 percent from an all-time peak in September, according to an index compiled by the real estate broker. January rents were 7 percent higher than a year earlier, Knight Frank said.
“With the banking sector expected to deliver much lower bonuses in the first quarter of 2012 compared to last year, tenants who are building deposits for eventual entry to the housing market are looking to reduce their rental costs,” Liam Bailey, head of residential research at Knight Frank, said in a statement. “Our view looking ahead is that rents will begin to rise slightly from the spring onwards.”
U.K. financial-services firms eliminated 58,000 jobs last year, more than any other country in the world, as London is squeezed by both the European sovereign-debt crisis and politicians who blame financiers for the global credit crunch. The cost of renting, which slid 20 percent from March 2008 to June 2009, jumped 27 percent in the two years to September, reaching the highest level ever, Bailey said.
“At best, disposable income even in central London, only rose by around 8 percent over the same period,” he said. “Landlords are having to accept that continually rising rents are not a fixture of the market.”
Companies cut their rent budgets by as much as 15 percent over the last 12 months for employees relocated to London, the report said.
Knight Frank doesn’t anticipate “significant rises from here,” Bailey said.