London's Housing Boom, Millionaire Exodus, and Rental Market Shake-Up: Key Trends and Insights

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London is brimming with capital waiting to be invested in housing, facing a millionaire exodus, and undergoing significant changes in the rental market. Key insights cover Melanie Leech's vision for unlocking capital, Labour's private school tax raid, non-traditional PCL areas, voluntary rent increases, and mortgage rate cuts.

Melanie Leech, Chief Executive of the British Property Federation (BPF), envisions a new housing boom in London, akin to past transformative periods. Since the 1980s, London's population has grown by almost half, yet housing supply has lagged, contributing to high rents and declining home ownership. The BPF’s manifesto, "Building our Future," calls for critical changes to the planning system, aiming to provide homes for diverse demographics and budgets.

To expedite development, more planners are needed. Political parties are committing to providing more resources, and BPF members are willing to pay higher planning fees for faster, more effective systems. With significant capital available, smart investment can unlock more build-to-rent (BtR) properties, housing for older people, student housing, and social housing. BtR properties offer long-term leases, predictable rental increases, and well-maintained facilities, providing greater security and quality for tenants.

With the right policies, the BPF predicts that BtR output could double to 30,000 homes annually across the UK. Investing in purpose-built student accommodation (PBSA) is essential, enhancing the student experience and alleviating pressure on the wider rental market. Private sector capital is increasingly invested in social housing, with partnerships between not-for-profit and for-profit sectors emerging to boost supply. The BPF’s manifesto offers the next government an opportunity to unlock investment, power London’s economy, and maintain its global status.

For property investors, non-traditional prime central London (PCL) areas like Camden, Notting Hill, Shoreditch, and South Bank are becoming attractive. These areas have experienced significant urban regeneration, boosting desirability and property availability. Young, affluent buyers are drawn to these neighborhoods for their cultural, culinary, and entertainment options, alongside potential for strong investment returns.

Notting Hill, with its colorful houses and famous market, has seen property values increase by 101% over the past decade. Shoreditch has undergone major transformation, with significant price rises and a growing number of high-value properties. Camden and Kentish Town have seen substantial rental price growth, making them attractive for investors seeking higher returns.

Labour’s plans to address the rental market include preventing landlords from creating bidding wars, though renters can still "voluntarily" offer higher prices. Inspired by New Zealand’s policies, Labour aims to ensure advertised rental prices match final charges, limiting competitive bidding. Critics argue this creates a loophole, as competitive bidding environments persist due to supply shortages.

Labour also proposes limiting the amount of rent tenants can pay upfront. Scotland’s government has implemented rent rise limits and eviction moratoriums, offering a model for tenant protection. With Labour leading in polls, their plans could significantly impact the rental market.

In mortgage news, NatWest has reduced fixed-rate mortgage costs ahead of a potential Bank of England rate cut in August. The bank’s five-year fixed rates for remortgage now start from 4.26% with a £1,495 f

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