London lettings market to remain fragile

Wood said: "In the first six months of the year we recorded rental rises of just two per cent in our branches across London.

"Due to the current economic climate, we have seen a shift in supply and demand, with the supply of properties to let starting to outweigh demand from tenants."

Wood forecasts that the market will continue to be fragile in 2009 with a fall in the number of tenants registering.

"In 2009 the lettings market will remain fragile. We will continue to see a fall in tenants registering as most will not move unless they really need to.

"Our stock levels are likely to rise as more would-be sellers rent out their home and canny investors will buy investment properties cheaply to rent out. As such, there will be a greater choice for tenants and the supply demand ratio will increase."

According to Wood, with the economic climate as it is alongside rising unemployment, it is vital landlords have insurance to protect against defaulting tenants.

"On the bright side, there will always be demand for properties in London as the capital has Europe's largest workforce, and so will weather an economic downturn better than regional areas.

"The student lettings market is recession-proof and so landlords considering investing should target university areas such as Peckham and New Cross for Goldsmiths College and areas with University hospitals such as Tooting.

"Overall, 2009 will not be an easy year for the lettings market.

"Landlords who have good, well presented properties close to transport links and who are prepared to be flexible and negotiate on the rental price are likely to find tenants quicker and avoid void periods more than landlords who hang on for top dollar rents," she added.