Busiest quarter in Benham & Reeves Lettings history for rental transactions but landlords should be mindful of flattening rents.
Amid widespread reports that London’s rental market is stagnant due to landlords exiting the buy-to-let market, weakening tenant demand and oversupply, Q3’s heat map tells a different story. In fact, the last quarter has been our busiest in history with over 1,000 new tenancies agreed across our 16 branches London-wide. This represents a 22.1% increase in transaction volumes on Q3, 2017. An equally impressive stat is that we now have 22 applicants per property, compared with 16 at the same time last year, a sure sign that the world’s capital, London, shows no sign of lessening in popularity in terms of where to live.
It’s been a staggering three months when you consider how much the London property market has been in the news, in addition to fears around Brexit continuing to make the headlines. This has not impacted on the appetite for London rentals, however. From small units to large, from new-build apartments to period, basement properties, demand has been high across the board, and at every price point.
Even at the top-end of the prime central London market, we have seen properties be snapped up at an astonishing rate. Each branch now has a waiting list of applicants, fully referenced and ready to go when the next apartment becomes available. This is clearly good news for landlords and homeowners who are considering letting out their property.
Even with interest rate rises, stamp duty changes and tighter restrictions on lending, the reality is that we have not seen a single one of our clients exit the market. During our recent overseas Directors’ Trip, our investor clients were keen to discuss expanding their portfolio. This was particularly evident at our Shanghai office, which Chinese landlords eager to understand the current situation in London. For this reason, we have recently expanded our overseas liaison team in London, in order to expand the service we can offer our overseas clients, including the appointment of Ann Moir who heads up our China desk. Ann is fluent in Mandarin and English, has good knowledge of international residential sectors and has worked at the heart of the corporate rentals market in London for several years.
With most good news stories however, comes a proviso. As our heat map shows, rents across London are, in the main, flat. While volume and transactions have increased dramatically, rentals have not followed the same trend, and landlords should take note of this.
There is lots of stock on the market, therefore it is important to maximise your rental investment as much as possible; the large margins just aren’t there to be had right now. We do see this changing in the next 12 months however, but for now, we would encourage property investors to ensure their properties are furnished to a high specification, have all the amenities that today’s lifestyle tenant demands including high-speed broadband, 24-hr concierge services and leisure facilities.
An equally important point to consider is to ensure your property is financed through the most efficient product you can find. Most UK lenders have recently reduced their fixed-term rates on buy-to-let re-mortgages and this could present a way to increase your yield. As always, seek independent financial advice before making any mortgage commitments.
If you would like to discuss how to make the most of your rental investments or discuss the current London rental market in more detail, contact a member of our team.
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