Across London, enquiry levels continue to rise but we are continuing to see shortages of good rental properties, in fact we could let most of our properties many times over as demand continues to outstrip supply. We simply need more new instructions! It’s a key issue being experienced at all of our 19 London branches and one that we are working hard to overcome.
The reasons are pretty clear. Thanks to the opening up of international air travel, the last few months have seen large numbers of overseas professionals and wealthy students return to London, having stayed away during much of 2020 and the first half of 2021. Because of the pandemic, building of new homes slowed so some properties that should have come to market, have been delayed. Even the Government has not met its own target and the media is reporting a huge shortfall of homes which means people are forced into renting.
To add some context here, in January 2019 we had an average of 24 applicants for every available property. Last month, we had an average of 97 applicants per property. This is truly unprecedented in our 60+ years of business!
A new kind of normal now
This ‘return to normal’ has created huge pent-up rental demand, with well-presented flats being snapped up as they become available – and in many cases before they officially come onto the market. This is because of the waiting lists we currently have all over London. Currently, the most demand is for rental properties in Tube fare zones 2 to 5 but prime central London has also picked up and our Kensington and Knightsbridge branches have been doing brisk business. And while there are some new apartments completing in residential developments in outer central zones, supply is not enough to meet this exceptional demand from renters.
Many renters are now waiting for properties that will not be available until March or even April, such is the current shortage of rental stock. In the meantime they are prepared to live in short let accommodation or even a hotel, while they wait.
Most tenants renewing their leases
Professionals and students who returned to London over the last year and took out a new tenancy, when rents had dropped, are now choosing to renew at the end of their current lease. But market conditions have changed dramatically so many landlords could now be considering an uplift in rent on renewal.
Tenants know that there is very little available to rent right now so their best option, financially and practically, is to save themselves the hassle and just stay put. This, in turn, is also reducing the amount of stock coming back on the market, adding to the scarcity of rental properties. Most tenants seem to have fairly good budgets. Many who have moved home over the last 12 to 18 months have found good deals but leases renewing now and over the next few months will generally be at higher rents than for some time. So rents are starting to balance out and are at a level between what renters are willing to pay and what they can afford to pay for their London accommodation.
A word of caution here though. With the rate of inflation high, in December it was 5.4%, and utility bills seeing increases upwards of 30%, I would urge landlords to take consideration of the running costs their tenant is now having to absorb and ensure affordability before hiking up the rent. Please talk to our branch staff if you need any guidance on this.
Choosing a professional letting agent to let your rental property
The current rental market is complex and fast-moving, so, if you are a landlord due to complete on a residential property in London in 2022, how do you decide on which letting agent to use to help you achieve the highest rental income? It can be a difficult decision. There are hundreds of lettings agents in London, so what experience and expertise should you expect them to provide?
Currently, a letting agent should be able to find you the right tenant within 7-10 days. They should have extensive experience in lettings, not just sales, and they should have good local expertise with offices that are nearby your property.
Their services should include help with the initial handover of the property if necessary, professional furnishing services and property management. They should have extensive contacts amongst top international companies based in London to ensure they can find you a professional tenant – quickly. Any longer than a week or so and they aren’t the right people for the job in this buoyant market! And the best companies also offer full accounts services too.
We also work closely with London’s top developers and have on-site branches in many leading residential developments – exactly where most professionals wish to live – so we’re their ‘go to’ lettings agents for each development. And of course, the agent should be a member of Propertymark, the property sector’s professional body.
These are just some of the ingredients you should look for in choosing an agent for your rental property but please get in touch with any of our London or international offices should you wish to discuss our services.
Demand for rental accommodation in London
The City and East London
Our City and East London branches have had a very positive start to the year, with very strong demand. We are seeing a rise in the number of professionals relocating to East London with their fintech, tech, banking and pharmaceutical companies, as well as those working for start-ups. Throughout East London we continue to see shortages of stock. New residential developments completing soon will help to ease the situation a little.
Merino Wharf, the latest building at London Dock in Wapping, is due to complete soon and we already have some new instructions here. We expect a Manhattan apartment at Merino Wharf to achieve £550 – £575 per week, a one bed £625 – £675 per week and a two bed £800 – £900 per week. We’re also handling new apartments at Cashmere Wharf.
At 250 City Road in Shoreditch, enquiry levels are high but stock levels are low, with no significant new completions due until later in the year and all current tenants renewing their leases.
Our West London branches are also experiencing the same shortages of stock and we are often receiving multiple offers on a single property. Here too, applicants are moving into short-let accommodation while they wait for a property to become available, which may be a couple of months. New developments are launching over the next few months – such as Sibley House, the new phase at The Green Quarter in Southall (a Berkeley Group development), Western Circus in Acton W3 (from Barratt London), and Hayes Village, a new Barratt London development on the site of the former Nestle factory. Interest from applicants is growing as we await completion of these apartments.
At Fulham Reach in Hammersmith, our branch is extremely low in stock and again, most current tenants are renewing their leases so there is not enough new stock coming to market. Many new applicants are agreeing a new tenancy simply based on a video tour, such is the need to move quickly to secure a rental property in the area.
Our White City branch next to Westfield London has very little stock as there are no new completions due yet. Here, renewals have been high with corporates and wealthy students our highest demographic.
Central and South London
In central and South London we are also seeing high demand and low stock levels, with tenants waiting up to two months to move into their chosen property. At Battersea Power Station in Nine Elms, a new phase is due to complete from April while in March there will be new apartments completing at DAMAC Tower, which will help to ease stock shortages a little. We would very much like to receive instructions from landlords in any of the new Nine Elms schemes as we are experiencing very high demand and have good waiting lists.
North and North West London
Beaufort Park in Colindale is also experiencing strong demand but supply to limited and most existing tenants are renewing so there is only a minimal turnover of tenants. There just aren’t enough properties to meet demand at this ever-popular development.
Over in Highgate, properties are also letting very quickly, some after only a video tour. Highbury Stadium Square and Woodberry Park, on the fringes, remain very popular and we have waiting lists of tenants for these developments. We are expecting a new phase to complete at The Clarendon, in nearby Hornsey, from June, and further new apartments at Woodberry Park in the next couple of months.
If you are a landlord with a tenancy due to end soon and would like advice on how to maximise the rental, please get in touch with your local Benham and Reeves branch where our teams can advise you on current market conditions and provide a free valuation of your property.
READ MORE: 2022 looks bright for London’s landlords
View all posts by Anita Mehra