London Bankers Become Landlords as Rents Hit Record

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http://www.bloomberg.com/news/2012-11-21/london-bankers-become-landlords-as-rents-hit-record-mortgages.html

Vivek Jeswani became a landlord by accident when Deutsche Bank AG (DBK) transferred him to New York two weeks after he moved into a new home in central London. Now back in the U.K., Jeswani views the apartment in Baker Street, the fictional home of Sherlock Holmes, as one of his best assets and is about to buy another home to expand his rental business.

“There are no other investments as attractive and you’ve got some security if you’ve got an asset you can use yourself,” the 36-year-old risk officer at China Construction Bank Corp.’s U.K. unit said. “There’s a good yield over 5 percent and being in central London, you’ve got demand domestically and internationally.”

London rents have risen more than 6 percent in the past year to a record, even as job cuts by banks reduce employment in the financial-services industry to a 20-year low. Technology and media companies are drawing workers to the city, while lenders restrict mortgages to all but the most creditworthy customers. That’s encouraged individual investors and companies including KKR & Co. to enter the rental market as central banks push down yields on debt to record lows.

The average rent in greater London climbed to 1,240 pounds ($1,974) last month, according to an index compiled by HomeLet. That was up 32 percent from October 2009, when rents averaged 940 pounds per month. The cost of renting a property in the rest of the country increased 7 percent between 2009 and 2012, said Homelet, the U.K.’s largest referencing and rentals insurance company.