According to Ludlow Thompson, London residential rents were +11% higher in April than the year before as rents are being pushed up by a shortage of private rental property.

The shortage is caused by the new-build development pipeline being almost completely frozen as banks pulled funding in the credit crunch and the increase in house prices that have allowed accidental landlords to sell those properties they had rented out.

Stephen Ludlow, director, said: “The rapid recovery of the London jobs market and a significant lack of private rental properties are combining to force up rents.

“During the recession rents fell to historically cheap levels because landlords were willing to take lower rent to keep good tenants in place. When concerns over unemployment increase, landlords often reason that it is better to take less rent than having to search for a new tenant.

“Even though unemployment is still quite high, sentiment in the job market has turned a corner and people are less worried about being made redundant. A lot of tenants, particularly in the young professional market, are now happy to pay a bit more to keep a flat they like or to upgrade to a bigger property or better location.

“Rents could go higher if the job market continues to recover, particularly if there is still a shortage of private rental properties. A lot will depend on how the next Government handles the economy.”