It will come as no surprise to our landlords that we are continuing to see demand soar for rental accommodation in London. Most of our clients have been seeing their properties let within a couple of weeks of coming to the market at most, with voids between tenancies minimal.
And this has remained the case during the first few weeks of the year when demand is usually slower. This year we have been busier than we would expect across most of our 16 lettings branches but with demand so high, severe shortages of stock remain a major issue, not just for us but for all letting agents in London. Of course there are several reasons for this, not just the high demand from overseas professionals who continue to move to London (and this shows no signs of slowing down despite ongoing Brexit negotiations), but also as a result of some landlords exiting the market due to unfavourable tax changes, leading to fewer rental properties available in London.
While we cannot deny that tax changes have presented challenges to buy-to-let investors recently, the incredibly strong rental demand in London means that our landlords are focusing on other priorities in order to maintain their rental yields. For some time landlords have been investing in residential developments located beyond Zone 3 where sales prices are lower yet rental demand is still high, enabling them to achieve good rental yields. Generally tenants are keen to live in these new developments on the outskirts of London, happy to exchange a slightly longer commute for a more affordable rent – so areas and developments which offer landlords good value, are usually also popular with renters for the same reasons.
Another advantage of the current market is that, with demand so high, void periods between tenancies are minimal, just days in many cases, helping to boost yields. And of course many renters are choosing to renew their existing tenancies and this too benefits both landlords and tenants, minimising costs and hassle for both.
If you have bought an apartment off-plan in one of the many developments completing in London in 2020 contact your nearest Benham & Reeves lettings branch for a free market appraisal of your property.
Our five East London lettings branches (the City, Canary Wharf, London Dock/Wapping, Surrey Quays and Greenwich ) have had an incredibly strong start to the year. We are definitely seeing more enquiries than at this time last year (which was itself very busy) and in part this increased activity is due to higher stock levels as a number of major residential developments are completing at the moment, boosting the number of rental properties available. These include Royal Mint Gardens where we have had over 40 apartments to rent and the response so far has been very good. The key is to have the right type of stock at the right price point and at the moment we are fortunate to be in this situation. An interesting trend emerging over the last three or four months is the growing number of US professionals moving to East London, in fact we are currently seeing more US applicants looking for rental homes than at any time since 2008.
The last few weeks have seen strong demand at our Fulham Reach lettings branch and apartments at the Fulham Reach development itself have been flying out – at one point we had let all our two bed apartments and were completely out of stock. Most flats are letting as soon as they go onto the market, or even before they are advertised online. Tenants are not attempting to negotiate on rent as with the lack of stock and high demand they recognise that there is no point doing so. At times we have also been completely out of stock at Sovereign Court. Tenancy renewal rates are also very high and most existing tenants choose to stay long term, at least two or three years.
At Dickens Yard in Ealing, Kew Bridge in Brentford and Imperial Wharf near Fulham, our lettings branches have all had a busy few weeks, with plenty of applicants looking for new homes but unfortunately shortages of stock are continuing. With not enough properties to meet demand we regularly have waiting lists of potential tenants waiting to move to these developments. Renewals are still high, further exacerbating the shortage of stock. Properties are letting for asking rental and tenants are having to put in an offer quickly, without attempting to negotiate, as there is such stiff competition for rental properties. Our Kew Bridge branch is currently handling lettings for Habito in Hounslow which has just started completing. Viewings are now taking place and there is a good response from applicants looking for high quality accommodation locally. Rents are £250+ per week for a one bed and from £325 per week for a two bed flat.
Rental demand at our central London lettings branches in Knightsbridge, Kensington and Hyde Park continues to pick up after a fairly quiet start to the year. A continuing trend amongst tenants is the desire to renew their existing tenancy rather than move home without a good reason to do so. As a result, we are seeing landlords much keener to negotiate with existing tenants in order to agree a slight increase in rent rather than go to the hassle and expense of finding a new tenant. The rental properties most in demand at the moment are affordably priced studios and one bed flats and we have reasonably good stocks of these. The market for premium properties at over £1000 per week is slower. Those with larger budgets tend to look for new build apartments in smart developments with good amenities such as a gym, swimming pool and concierge. Older, period properties therefore have to be competitively priced to take into account the fact that they have fewer amenities. We are starting to receive more instructions at the moment so have fairly good stocks to meet demand as it grows.
Business is brisk at our Nine Elms branch, with high numbers of enquiries coming from applicants from early January. Apartments are letting almost immediately, and applicants are making an offer (almost always full asking rental) within hours of a viewing. Most do not negotiate on rent so they have to make an offer quickly, as they know that there are not enough rental properties to meet demand. We already have tenants waiting to move in in March and most applicants are prepared to wait until a property becomes available, so popular is Nine Elms and the surrounding residential developments in Vauxhall. A high number of existing tenants are renewing their tenancies and are agreeing rent increases of around the current rate of RPI (3.2%). Landlords understand this and recognise that this is an appropriate increase in line with market conditions.
Shortages of rental apartments continue at Beaufort Park in Colindale, with new enquiries flooding in and properties letting immediately, usually after just one viewing. We are busier than we would expect to be at this time of year – enquiry levels are generally high and we are also still finding homes for staff moving to London to work at the many well-known tech companies setting up offices here. There are no new buildings completing here until later this year so these shortages of stock are likely to continue. We are also seeing higher than usual numbers of tenants renewing their tenancies, looking for stability at the moment, and this is adding to the shortages of stock.
In Hampstead and Highgate, enquiry levels have been good during the first few weeks of the year but continuing shortages of stock are restricting movement in the market so when apartments, particularly one beds, become available they are snapped up by applicants, usually after the first viewing. They recognise that they do not have the luxury of comparing a number of properties but instead must act quickly before another applicant makes an offer. We have also had several families looking for larger homes close to the area’s good schools and this is earlier in the year than we would expect. Typically they are looking for homes priced at £1000+ per week so at the moment these larger properties are also letting more quickly than usual. Generally existing tenants are renewing their tenancies.
If you have a property becoming available soon for rental and would like an up to date appraisal of what rent you can expect, why not ask us for a valuation. Or talk to one of our branches. Contact us.
View all posts by Anita Mehra