There is no doubt about it: demand for rental properties in London has been incredible this year!
At the beginning of 2019 we could not have imagined how strong demand would be. This is clearly good news for our landlords, the majority of whom are experiencing only the very shortest voids. This will be helping them maximise their rental yields at a time when changes to UK tax and governance have presented some challenges.
This buoyant market has frequently led to shortages of rental stock throughout the year and most of our lettings branches ran out of stock at times. We have been working hard to overcome this by continuing our Landlord recommendation and referral scheme which brought us some much-needed property instructions this year. These were in different projects across London including Nine Elms Point, White City Living, Atlas Building and Royal Mint Gardens to name a few. We will be carrying on with this programme in 2020 and anyone reading this should please contact us if you have a colleague or friend who needs their property rented out and we will be happy to reward you.
A good example of the strength of the market is the demand we saw for rental homes at the Atlas Building in East London, where we had, at times, 17 applicants for each property. Most branches have had waiting lists for popular developments such as London Dock and Marine Wharf in Surrey Quays; Dickens Yard and Kew Bridge in West London, Beaufort Park in North London and and Nine Elms Point in South West London.
Another key trend during 2019 was the rise of Fintech (financial technology) professionals moving to London. According to recent research compiled by the Berkeley Group, London has the world’s highest concentration of financial and professional services firms (64,000), the UK capital attracted more Fintech deals in the first eight months of 2019 than New York or San Francisco and the sector has attracted £4.5bn of investment since 2015, with 2019 almost doubling that of 2018. 44,000 people work in Fintech roles in London (more than Silicon Valley or New York) and this explains why Fintech professionals are starting to dominate rental demand in many areas.
With the key challenge this year being the shortages of stock, gaining new instructions from landlords has been a priority for us. There is never enough stock to meet demand but, with many of our lettings branches situated on-site within some of London’s most popular residential developments, we are in the best position to offer both tenants and landlords an unrivalled service, something which other lettings agents, often located much further away, simply cannot match.
As part of our continuing drive to gain new instructions, myself and other directors have been visiting overseas clients this year, as usual. Our latest trips have been to Malaysia, Singapore, Mumbai, Bangalore and Nairobi, helping clients navigate their way through the complex London property market, sharing our expertise and insight into current trends and helping them find value and growth potential. We also did some brisk sales for clients who wanted to expand their portfolios.
While property sales in London have been subdued during 2019, we are now seeing some investors, particularly international buyers and first-time buyers, dip a toe into the London property market, as they recognise that the fundamentals of London property investment remain sound and that softening sales prices caused by Brexit uncertainty will not last for ever. Current market influences, including the weakness of sterling, good discounts from developers and of course strong rental demand and yields, mean 2019 has been a good year to find real value and growth potential in the London property market. With a third of Londoners now renting and by 2025, 60% of Londoners expected to be renting, new home building cannot keep pace with the demand for rental homes, which explains the soaring popularity of London’s many new residential developments.
For example, White City Living, next to Westfield London Shopping Mall in West London has been incredibly successful. Completions here started in October and already apartments to rent have been extremely sought-after. We furnished a one bed apartment here and let it within 12 hours of completion to a Japanese banking professional at full asking rent. The sales market for off-plan homes is also holding up well – in the same building we have just sold a two bed home off-plan to one of our Hong Kong investors.
South of the river, in Vauxhall, Nine Elms Point has been another incredible success story for investors, with those who are letting out their properties seeing a jump in rents of over 20% in the last year. Meanwhile, Oval Village in Kennington (Zone 1), is due to complete in 2022 and is already generating a lot of interest and we have been organising trips for buyers from Malaysia and India to view the development.
Other developments that have been selling well include Harrow Square (in Harrow, North West London), Harrow View West, Clarendon in Hornsey, Hayes Village and London City Island. We are also now starting to see uptake for off-plan purchases of apartments Berkeley’s Grand Union scheme, a huge project coming to Alperton, North West London in Q2, 2022.
For first-time buyers, the other significant market for London property ownership is the success of the UK Government’s Help-to-Buy scheme. We have seen increasing numbers of entry-level buyers actively looking for their first home and crucially, they have higher budgets as a result of the scheme. We work with many Tier 1 UK property developers so we have access to a lot of projects across London and this year in particular, we have seen an increasing numbers of buyers using funding from the scheme to assist with their property purchase.
The EU status of the UK continues to pre-occupy buyers and while it is responsible for stalling growth in the property market at the moment, we believe that many buyers are waiting for the right opportunity to make their purchase. Investors are certainly becoming choosier and are taking their time to find the right property but those who have taken advantage of this current slowdown in the market look set to reap the benefits in the long term.
The City and East London
Rental demand across the areas covered by our five East London lettings branches (the City, Canary Wharf, Surrey Quays, London Dock/Wapping and Greenwich) has been exceptionally strong throughout 2019. Enquiry levels have been consistently high, even at times of year which we would usually expect to be quieter. The last few weeks are a good example – the end of November/December is usually a quieter period but this year demand remains unexpectedly high and we are seeing a lot more activity than usual. We are finding homes for professionals keen to move in December or January. Several new developments are completing now including Royal Mint Gardens where so far we have had more than 40 units available although already we have more applicants than properties. As we mentioned earlier, a key trend we have been seeing this year is the emergence of growing numbers of tech professionals moving to London. These range from CEOs of major corporations to professionals working for small start-up companies, with budgets from £300 per week to £2000 per week. This activity indicates that London could be becoming a European hub for the tech and Fintech industries and, as well as European applicants, we are seeing increasing numbers of US professionals moving to East London, something we have not seen for several years.
New residential developments are always popular, but a number of recent launches have really stood out this year in terms of demand from applicants. We had an amazing response to the Atlas Building, peaking at 17 applicants for each apartment there. Other developments which have seen exceptional demand include London Dock, Surrey Quays, Marine Wharf, Goodman Fields, One Blackfriars, Blackfriars Circus, Principal Tower, Southbank Place and Lincoln Square.
To sum up, 2019 has seen rental demand continue to grow substantially during a period which we had expected to see more uncertainty. And while rents are not increasing noticeably, void periods are minimal because properties are letting so quickly. This means that landlords are maintaining good rental yields. Tenancy renewals are also high at over 55%, so fewer properties are coming back onto the market, adding to shortages of stock. We expect 2020 to start in a similar way so if you are a landlord with a property in East London, please contact us to arrange an independent and unbiased rent appraisal.
Central and West London
Our central London and West London lettings branches, Knightsbridge, Kensington and Hyde Park in central London and Imperial Wharf, Fulham Reach, Dickens Yard (Ealing) and Kew Bridge (Brentford) in West London, have all seen buoyant rental demand in 2019, while also experiencing shortages of stock due to the high number of applicants. Victoria has been a real hotspot this year, becoming increasingly popular with renters – we expect this popularity to increase further over the coming months as the area’s regeneration continues.
But undoubtedly the most newsworthy story this year is of Nine Elms Point which has enjoyed incredible rental success. At the beginning of 2019, we anticipated demand would be similar to 2018 but interest has surpassed our expectations. The area is soaring in popularity amongst professionals and international students, all with good budgets. Properties have been letting very quickly and we have often had waiting lists. Many properties have been letting within a couple of hours or even before completion. As a result, rents have increased by as much as 20% and void periods are a day or two at most. Typically, a one bed flat at Nine Elms Point which would achieve a weekly rent of £425 last year, is now achieving £475 per week. At nearby Battersea Power Station a two bed flat which we let last year for £620 per week, is now, 18 months later, achieving £750 per week. Rental demand is high for all types of property – one, two and three bed apartments. Tenancy renewals are extremely high, at well over 90%. Perhaps the most important launch this year was Gladwin Tower where we had more than 35 instructions over the summer, all of which let immediately so this was an incredibly busy period for us. The last phase of this building is launching now and again demand is extraordinarily high.
Our Highgate and Hampstead branches have both seen strong demand throughout 2019 and again at times have been very low on stock. Throughout the year, most properties have been letting quickly and landlords have been benefitting from minimal void periods, allowing them to maintain good rental yields. And it has been another successful year at Beaufort Park in Colindale, again with rental demand even stronger than anticipated leading to shortages of stock throughout the year. This was alleviated by the launch of the Cornelia Apartments where we had a number of units available, most of which we let before completion.
If you have a property to let in any of these areas, or would like a free no-obligation rental valuation of your property please contact us. For more London rental market news and updates, subscribe to our newsletter.
View all posts by Anita Mehra