Landlords in London should brace themselves for an expected fall in demand in the new year, an expert has claimed.

Richard Cotton, divisional head of residential agency at Cluttons, said that the London lettings market would "remain active"in 2009.

However, he advised that landlords are likely to endure cheaper rental rates as the market continues to experience increased supply.

The problem would be exacerbated by the rising level of unemployment in the capital, as well as an upturn in the number of would-be sellers deciding to let their homes, Mr Cotton suggested.

Although this will be tempered by increased interest in renting from first-time buyers who are unable to secure finance, landlords could still face the threat of unpaid rents, he warned.

"As tenants suffer the effects of the economic downturn and rising unemployment, so sensible landlords will ensure they are well protected by insurance in 2009,"Mr Cotton added.

The Independent reported this week that there has been an increase in the number of landlords seeking rental guarantee insurance in recent times.ADNFCR-2002-ID-18936335-ADNFCR

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