London Rental Market – September 2015

With summer drawing to a close, many applicants are again turning their thoughts to finding a new home. Rental demand in London has remained at a good level over the summer months, with the market dominated by young professionals looking for one or two bedroom apartments, usually in a new development with good amenities – a gym, swimming pool, concierge and private parking are at the top of most tenants’ wish lists. Research just published by business consultancy PwC estimates that one in four households in the UK will be privately renting by 2025. And in the 20 to 39 year old sector, it concludes that over half will be privately renting by 2025. This continuing growth in demand by younger renters is a trend we are seeing across our 13 London letting offices as, increasingly, younger professionals see renting as a positive choice offering flexibility, a great lifestyle and high quality accommodation.

Central London

Our Knightsbridge office has been very busy, with plenty of enquiries and a noticeable increase in the number of managed properties we’re taking on. A couple of clear trends are emerging at the moment. Firstly, there’s a rise in the number of professional sharers looking for three bedroom properties. Two bedroom properties have been popular with sharers for some time as it allows tenants to afford more living space and a higher standard of accommodation. However, we’re seeing three bedroom homes becoming increasingly popular amongst sharers too, suggesting that tenants are now also keen to split their rent three ways to reduce accommodation costs still further.

Another important trend in the rental market is the shift in the type of property applicants are requesting. We’re used to seeing fluctuations in the rental market and at the moment we’re seeing a decline in popularity of traditional one bedroom period conversions. This is creating downwards pressure on asking rents for some of these smaller, period properties, even in previously sought-after areas which would once command a premium.

Increasingly tenants are opting for the gloss and high spec of apartments in brand new developments which can offer a complete lifestyle – with amenities such as a gym, pool, concierge and preferably parking. With more small, luxury developments being built around Knightsbridge, tenants have a greater choice of property, meaning a more competitive rental market. This greater competition means landlords with older properties need to make sure their property is nicely furnished or even consider refurbishing to stand out from other properties on the market. They must also be prepared to negotiate to secure a good tenant. The same applies to landlords who own a property in one of these new developments – when a development launches and a number of similar, new properties become available to rent at the same time, tenants have plenty of choice and the apartments that let quickly will be the ones that are competitively priced.

City, Canary Wharf, Docklands and East London

Rental demand in the City remains extremely high and we are letting properties within days of receiving an instruction. For example, we were recently instructed on 10 two bedroom apartments at the new Kensington Apartments at Cityscape in Aldgate.  We let all 10 within four weeks for £675-£750 per week. This is typical of demand at the moment, particularly for luxury rental homes, however there simply isn’t enough stock of these very high-end properties. This is a noticeable shift since last year when properties priced over £650 per week were proving slower to rent.

As ever, demand is high amongst young professionals moving to London for the first time, particularly young executives relocating from Europe with many coming to work in the financial services and accountancy sectors. Applicants tend to focus on areas such as the City and Canary Wharf. We’re also seeing high rental demand from international students ahead of the new university term. Rental properties close to Queen Mary’s in East London and the University of Greenwich are proving to be popular choices.

International investors continue to dominate property investment in the City – around 75% of our landlords are from overseas. Many buy a property when their children come to study in London then keep the property afterwards and rent it out. Investors who bought off-plan two or three years ago are already sitting on an increase in capital value of around 30%.

North/North West London

Young, professional couples have been dominating the rental market in Highgate over the last few weeks, usually looking for one and two bedroom homes. We see a broad mix of applicants, some relocating from overseas and others from London and other parts of the UK.

Many applicants prefer a new-build apartment and as these are in relatively short supply in Highgate, the launch of a new residential development usually prompts plenty of enquiries. Latest to launch are the City View Apartments at Woodberry Park. We’ve already received a lot of interest in these and new instructions are letting quickly. The apartments meet tenants’ desires for a high specification finish and good facilities such as a gym and pool. Also top of applicants’ wish lists are a location close to the tube, some outside space and preferably private parking. Properties that tick these boxes are generally quick to let.

Rents for properties in Highgate have remained steady over the last year, with a typical one bedroom apartment fetching £300-£350 per week, up £5 to £10 per week on last year. It is clear that the market remains price sensitive – applicants at all levels have seen little change in their accommodation budget recently and continue to look for good value for money.

Demand has also remained strong in Hampstead, with the market dominated over the last few weeks by families looking for larger properties close to the area’s good schools. We’re also busy with enquiries from young professionals looking for smaller apartments in Hampstead. Over in Hendon, our Beaufort Park office continues to see high demand as applicants look for the amenities and high spec finish of apartments in this sought-after residential development. In fact, during August, our on-site office enjoyed one of its most successful months since it opened in 2009.

For more information about the London Rental Market and investment opportunities within the Capital contact our friendly staff here. If you are interested in the rental value of your property try our valuation tool which produces a free, instant report.