Across our eighteen London lettings branches have all seen a dramatic surge in enquiries over the last few months and this is showing no signs of slowing down, even as we move towards the normally quieter winter months. Overseas and UK-based professionals are returning to London and international students have been arriving in droves over the last few weeks.
This extraordinary rental demand is now creating a severe shortage of good rental properties. Adding to the problem is the slowdown in the number of rental properties coming onto the market, in part because completions of new properties have been delayed due to the recent lockdowns. So the current scarcity of properties really is unprecedented.
In fact, the last 18 months have been a rollercoaster in terms of supply and demand across the rental market. In the spring of 2020 we saw demand collapse, almost overnight, as professionals moved away from London and returned to their homes and families, with rents falling and landlords concentrating on securing a tenant, even at a reduced rent.
Fast forward to autumn 2021 and now the tables have turned. The lack of good rental stock means that many applicants are now considering moving further out than they had planned, to the peripheries of London, in order to find a property.
Although happily brand new developments such as The Green Quarter in Southall, Eastman Village in Harrow and regeneration schemes such as Wembley Park and the Horlicks Quarter in Slough, mean there are some really good options for tenants willing to move further out of central London.
Clearly the current unprecedented demand is good news for landlords.
So if you last let your property in 2020 and are now looking for a new tenant, we have waiting lists of fully referenced applicants waiting to move to a new home as soon as possible. Please call your local Benham and Reeves branch for an up-to-date, free market appraisal.
Historically low levels of rental stock – a closer look at current trends
As we’ve mentioned, with restrictions easing and many companies requesting that their employees return to the office, at least for some of the time, and many employees themselves keen to return to London and the lifestyle that they’ve missed for so long, demand for well-located rental properties is at a high and demand has gone through the roof.
Last year’s intake of students are choosing to return to their universities, as well as the new 2021 cohort, so the number of students studying in London is also reaching record numbers. And in some areas, students who are unable to find a rental property are being forced to find an Airbnb property instead, possibly for several months, clearly a much more expensive option than a long term let.
This ‘race for space’ has led to property shortages and as a result, in most areas rents have now returned to pre-pandemic levels, and are in some cases higher.
The cost of renting is starting to climb
If these stock shortages continue, the cost of renting in London will almost certainly increase further.
Our latest research shows that, across London, the number of available rental properties listed on the market declined by 48% between Q3 of 2020 and Q3 of 2021. Meanwhile, the average cost of renting increased by £109 per month. In no less than 10 London boroughs, the available rental stock has more than halved in the last year, with declines of 54 % – 70%. In the worst hit boroughs, the cost of renting has increased by 9% on average, a rental increase of around £179 per month.
The City and East London, Woolwich and Surrey Quays
We are letting properties in the City and East London as soon as they become available but the current shortage is frustrating as we have many more applicants than properties available. Usually there would be more movement in the market generally but our current tenants are renewing their tenancies as they realise that, with rents increasing everywhere there is little scope to move property right now and they won’t find a better deal elsewhere. As a result, properties are not being freed up for new tenants relocating to London. This of course is adding to stock shortages and limiting choice further. We have high calibre applicants with good budgets but not enough properties!
When investors complete on new properties, they are being snapped up by applicants as soon as they become available.
We have had an excellent response to new developments completing and one of the most popular is Cashmere Wharf at London Dock. Others such as Landmark Pinnacle, One Park Drive and South Quay Plaza are also extremely popular.
250 City Road in Shoreditch, where our Japan Desk is located, is also sought-after but again we would like to receive more new instructions here to satisfy the huge demand from Japanese city professionals and others, looking for a walk to work property.
West London and the Thames River borders
There is a massive demand for properties in West London, as reported by our branches in Hammersmith (Fulham Reach), Ealing (Dickens Yard), Brentford (Kew Bridge) and Imperial Wharf in Fulham. We often have waiting lists of fully referenced applicants and properties let within a day or two at most, if they are in very good order and priced correctly. At Sovereign Court in Hammersmith, we recently let two brand new apartments even before they had completed, just on the basis of a video tour and for the full asking rental – the applicants, who work for globally recognised firms, hadn’t even seen the apartments in person.
At other residential developments in West London, such as The Green Quarter in Southall and Eastman Village in Harrow, demand is equally high and again, apartments are being snapped up by applicants. With slightly lower budgets, these professional applicants are pleased to find such a high quality home at a more affordable rental because they are located on London’s westerly fringe.
Existing tenants are all renewing (unless they are leaving London or have another very good reason to move) as they know there is very little else to choose from. And generally applicants are offering full asking rent, they’re not negotiating as they don’t want to risk losing a property.
North and North West London
Across North and North West London, namely Highgate and Hampstead two of our flagship branches, rental demand is high and stock levels are low. We let new instructions almost immediately and we can clearly see that this is a time of readjustment in the market. We’ve quite simply never experienced a market quite like this. We might carry out 10 viewings on a property and receive five offers. Applicants are not trying to negotiate – they simply offer full asking rent. On average, rents are now slightly higher than before the pandemic. Homes that have pristine kitchens and bathrooms are letting first.
Nearby at Beaufort Park in Colindale, our on-site branch is super busy. We are seeing the return of our typical applicants – international professionals and students, local professionals and increasingly BNO passport holders from Hong Kong. Here too stock levels are low and new instructions are snapped up immediately, while we also have waiting lists of fully referenced applicants. We’ve never experienced a year like this. Again, applicants are offering full asking rent with no attempt to negotiate with landlords.
Central London seeing 50 to 100 enquiries per property!
Prime central London is also seeing shortages of stock – our Hyde Park branch currently has only a couple of properties to let and anything new to the market rents in only a day or two. Many applicants are renting a property solely on the basis of one of our video tours, as they are anxious not to lose a property because they cannot view it in time. The rental market in the area peaked in September and at this point we were receiving between 50 and 100 enquiries per property, as long as it was priced accurately and well presented. This frenzied market is settling down now, now that the influx of international students is calming. But many students have been unable to find a long-term rental property that suits them and instead have had no choice but to move into an Airbnb apartment or even a hotel, possibly for some time, while they find a longer term solution. At the moment we are letting properties that will not be available until December or January.
Shortages of stock are also a challenge at Nine Elms where our branch manager reports at the time of writing, that we have only two apartments available to rent. We still have plenty of applicants looking so this is a really frustrating situation for us. New apartments are now completing at Embassy Gardens and DAMAC Tower and we are receiving a lot of enquiries for these. If you can help, please get in touch with our Nine Elms team.
Contact us for a free market appraisal
Clearly, the rental market in London has been evolving incredibly quickly over the last few months. Demand is high and rents have been pushing upwards too.
So if you haven’t had a rental appraisal of your property for a while then please get in touch with your nearest Benham and Reeves branch or international office where our teams will be able to give you an accurate and unbiased appraisal in this fast-paced market.
View all posts by Anita Mehra