According to research by Savills, rents grew by as much as 17.6pc in prime North London areas such as Hampstead and Islington last year, compared to a rise of 4.8pc in the mainstream UK market.
“Stock shortages persist which is good news for landlords,” said Jacqui Daly, Savills residential research director.
“The dynamic of constrained mortgage markets, of buyers adopting a ‘wait and see’ approach, a lack of new build supply, a return of corporate tenants, improving employment prospects and the reduction in accidental landlords, means that strong rental growth will continue to characterise the market in 2011.”
Savills predicts that rents will increase by an average of 8pc across prime London and by 7pc in the prime central zones (such as Chelsea) this year. This compares with a 2011 forecast for growth in London sales prices of just 1pc.