London luxury home rents fall as bank layoffs bite

Rents in central London's most exclusive neighborhoods have fallen for the first time in two years, hit by deep job cuts among bankers that have curbed demand for high-end housing, according to property consultants Savills. Average prime rents dropped by 0.4 percent to 60 pounds per square foot for the best homes in the year to mid-June versus the same period last year and were likely to remain subdued for the rest of 2012 as the UK banking sector's difficulties persisted, it said Friday. "Central London's prime rental market is dominated by tenants from the financial services sector and is a barometer for what's happening in the City of London employment market," Savills' director of research Lucian Cook told Reuters. The number of jobs in London's finance sector is expected to slump to its lowest level in 16 years this year as the euro zone debt crisis drives firms in the UK capital to cut 25,000 jobs, consultancy Centre for Economics and Business Research said in May. On Tuesday, state-backed lender Royal Bank of Scotland said it would make 600 staff redundant as a result of new UK rules due to take effect at the end of the year, bringing the total number of layoffs it has made since its 2008 bailout to 36,000. Hedge fund managers have more money than bankers to spend renting the best homes, Cook said, with bankers' spending power also hit by shrinking bonus pots. In February, Savills said hedge fund managers were likely to outspend bankers on buying London homes this year.