Landlords and investors in London's property lettings sector are likely to have seen a substantial increase in rental income over the past year or so, new figures suggest.
According to the latest HomeLet Rental Index, average rents in the capital were £1,348 per month in May 2014. This marks an increase of £116, or 9.4 per cent, from the typical monthly sum of £1,232 paid by tenants in the same month last year.
The findings showed general growth in the UK private rental sector, with the average rent for tenancies starting in May this year standing at £846 per month, 7.5 per cent higher than 12 months earlier.
However, the strength of the London market is having a big impact on the overall figure. If the capital is taken out of the equation, the average UK rental value falls to £687 per month, 2.5 per cent up on the £670 recorded in May 2013.
The report also showed that, in the three months up to May this year, average tenant incomes for new tenancies were 6.1 per cent higher than in the same quarter a year earlier.
Martin Totty, chief executive officer of Barbon Insurance Group, said the results show that the private rental sector is continuing to attract strong demand.
Mr Totty attributed the consistent growth in rental values over the past year to the close correlation in most regions between the increase in average rents and growth in tenant incomes.
He added: "The increase in rental values is a positive sign for buy-to-let investors - the steady rental growth that the sector has generated in recent years is in sharp contrast to the peaks and troughs seen in house prices.
"We may also begin to see additional rental stock coming on stream, particularly if pension savers take advantage of the annuity reforms and choose to invest in buy-to-let property."
Looking forward, Mr Totty said there is "every reason to expect" that demand for rental property will continue to rise in the future.