Demand for rental properties in London shows no signs of slowing down. In fact, we’re seeing quite the opposite, as quality enquries from professionals relocating here from overseas continues to rise, together with UK-based professionals already living here but looking for a move. Large tech and other companies are now asking their staff to return to their offices, with companies such as Apple, Google and Reuters setting deadlines for their employees to return at least two days a week from mid-April.
The result is an influx of professional renters, each looking for a smart and well located place to call home. So the relocation market generally is strong, with large corporates continuing to move their staff to London – from sectors including tech, Fintech, banking and finance.
But with demand outstripping supply, the stock of available properties remains fairly static. While new completions are taking place regularly it simply isn’t enough to meet demand. And we don’t see an immediate solution to this shortage of homes.
Of course, this is good news for landlords who are seeing their properties let very quickly, often with minimal void periods.
Most rental apartments in London are letting almost immediately, and many of our branches have waiting lists of referenced tenants ready to move as soon as possible, but as always, presentation and location is key. At the moment, some properties don’t even reach our website and are let as soon as they complete or even before. Equally, when a tenant moves out we usually have a new tenant signed up and ready to move in immediately based on just a virtual viewing in some instances.
In most parts of London, tenancy renewals are therefore high, with over 80% of tenants renewing their leases and in some areas over 90%. Tenants are fully aware they won’t be able to find a cheaper deal elsewhere. Some of those moving on are tenants who renewed or took out tenancies at the height of the pandemic when rents were much lower and are now struggling to afford current market rents.
Many tenants are looking for longer tenancies – up to two years – to lock in current rents and give themselves greater stability, while others are keen to have a break clause, perhaps at six or 12 months, to retain flexibility. Each case is individual, depending on circumstances.
Now, rents are increasing and are back to pre-pandemic levels or perhaps around 5% – 6% higher. And in a few locations, 10% -15% higher. For some tenants, this is now unaffordable and their only option is to find alternative accommodation somewhere more affordable.
In the City and East London, we are seeing more movement in the rental market as existing tenants consider a move for many reasons – although tenancy renewals remain high at over 75%. Sometimes affordability is an issue, as we mentioned earlier, as rents are increasing to pre-pandemic levels. But some existing tenants are now ready to move on for other reasons – we recently had one New Zealand tenant who had been unable to return to New Zealand during their strict lockdown, but with the country opening up again, they are now able to return home.
The East London rental market is dominated by professionals, particularly from finance, banking, Fintech and IT sectors. Budgets are solid across all these sectors. We’ve seen an increase in the number of professionals relocating to London but in particular, Indian professionals stand out at the moment – they’re moving to the City and East London and have higher budgets than previously.
We are expecting several new residential developments to complete soon. In East Ham, E16, apartments at New Market Place, a Barratt London scheme, will be completing in the next few weeks and are ideal for young professionals looking for a high quality, stylish home on a budget. One bed flats are expected to achieve £1,300 – £1,400 per calendar month and two beds are projected at £1,600 – £1700 per month.
The next phase of apartments at London Dock – Merino Wharf – is due to start completing later in April, with rents of upwards of £650 per week for a one bed and over £800 per week for a two bed. Rents here will always command a slight premium because of its Zone 2 location and proximity to the City.
Across central and South West London, our branches rental properties are letting immediately, usually at full asking rental. Developments such as White City Living and Television Centre remain extremely popular and demand is high. We have more enquiries than properties available so when flats become vacant they let very quickly, with rents back to pre-pandemic levels. With availability so limited, renters are looking ahead and signing a lease on a property that won’t be available for perhaps a couple of months. We’ve already seen enquiries coming in from international students, much earlier than we would normally expect as most international students have heard how competitive the London rental market is right now.
In Victoria SW1, the Nova Building is another rental hotspot, while south of the river, our Nine Elms branch is letting apartments as soon as the previous tenants vacate, or even beforehand with tenants waiting and ready to move in.
Flats to rent in Nine Elms are achieving full market rental and again are back to pre-pandemic levels or slightly higher. We have waiting lists of tenants keen to rent a property as soon as it becomes available but with over 90% of tenants renewing their leases, stock availability is low. This lack of stock is a real problem but we do have some new apartments completing soon.
Prospect Place, the next phase at iconic Battersea Power Station, is completing soon – we have had several instructions here and have received full asking rent offers on new apartments before completion. Rents being achieved are £600 per week for a studio or £920 for a two bed apartment. We also have several instructions at DAMAC Tower which complete soon and at 9 Millbank (Berkeley Group), a luxurious riverside development in Westminster, SW1.
Our West London lettings branches continue to see strong demand and, as a result, shortages of good rental properties continue. At Fulham Reach in Hammersmith there have been several completions recently and these flats have been snapped up immediately. We currently have no vacant properties here! Tenants understand the market and realise there is little room for negotiation with landlords. Many applicants are looking for an 18 or 24 month tenancy to give them some stability. Tenancy renewals are over 80% so most tenants are choosing to stay in their current home rather than risk trying to find somewhere else in this crazy market.
Our branches in Berkeley schemes such as Dickens Yard, Kew Bridge and Imperial Wharf are reporting similar scenarios, with very few flats and apartments available and new instructions letting immediately. Here around 90% of existing tenants are renewing their leases.
New property developments such as The Green Quarter in Southall are being snapped up and we are awaiting completions of flats at Grand Union in Alperton and Western Circus in Acton for which we now have waiting lists. All very encouraging for our clients who have purchased rental investment properties here.
Our North/NW London branches are very busy, with Beaufort Park in Colindale reporting that they have very little stock available. Renters have had to change their strategy and plan further ahead than usual – they are now looking for rental properties that will not be available for three or four months. There are increasing numbers of professionals moving to Beaufort Park – companies that didn’t take on new employees during the pandemic are now starting to hire again in large numbers. We had a number of instructions at the new building, Finlay House, recently and these rented instantly.
In Highgate and Hampstead, properties are in such short supply that we frequently see more than 10 applicants per property. Stock levels are improving a little though and we hope to see more new instructions by the summer. There are new flats completing at Woodberry Park, N4, the Clarendon, N8, and Tottenham Hale, N17, and we expect our instructions here to let very quickly, probably even prior to completion.
We have waiting lists of fully referenced tenants waiting to move into a new rental home over the next few months. If you have a property completing soon or one that is about to become vacant, contact your local Benham & Reeves branch for a free, up-to-date market appraisal.
View all posts by Anita Mehra