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London rents 'booming'

The number of people renting properties in prime central London locations is approaching record levels, a new survey has revealed.Knight Frank says that the annualised rental rate in the capital in the 12 months to June was 12.2 per cent.The estate agent claims that the proportion recorded in June was the highest since the fourth quarter of 1999.Quarterly growth in rents now stands at 4.2 per cent, today's survey showed, with housing shortages in central London refusing to disappear."This rental increase represents high highest quarterly growth in Prime London since the index began back in 1995," said Knight Frank head of residential research Liam Bailey."Recent strong rental growth has been accredited to the shortages of stock in the marketplace. It is our experience that some landlords are continuing to sell properties to take advantage of high capital price growth, and also to reduce their exposure to higher interest rates."But Mr Bailey admitted that yields in London had dropped to an "all time low"."Although rents have grown strongly since the start of the year, capital value growth has overshadowed the performance of the rental market," he explained."We anticipate that over the coming months rental growth will catch capital value growth as the sales market slows over the summer."

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