Despite a constant drip of negative headlines around UK interest rates, house prices and buy-to-let, the private rental sector shows no sign of a downturn – in fact, we are experiencing one of the busiest Autumn’s since the crash in 2008.
Demand for rental accommodation in London continues to outstrip supply in many areas. At the top of many applicants’ wish lists is a high specification apartment in a brand new development – complete with modern day ‘essentials’ such as a gym, a swimming pool and a concierge service. And despite the launch of many such developments over the last few months, our main problem at the moment is a lack of stock. We are currently seeing as many as 22 applicants per property in some developments and even as more properties come to market, we simply cannot keep up with demand.
Clearly, despite current political uncertainties, people continue to move to London to study, to take up new jobs or move on in their career. In short, life goes on. And interest in living and working in London is as high as it has ever been. With Crossrail coming soon, London has become even more accessible to a whole new raft of workers who can now consider living further afield yet commute quite comfortably into the Capital for work.
Some of our lettings branches, in popular developments such as Beaufort Park Colindale, Fulham Reach Hammersmith, Dickens Yard Ealing and Kew Bridge near Brentford have been experiencing real shortages of stock, so competition amongst applicants in these areas is intense and it is now common practice for each of our branches to keep a waiting list of applicants, fully referenced and ready to go when the next apartment becomes available.
And this lack of supply looks set to continue – London’s population is predicted to grow by nearly 40% over the next 30 years but, even though 46,500 new builds were completed in 2017, the highest since the 1930s, the amount of new housing being built still falls far short of what is needed.
This means London property remains a sound investment in the long-term, irrespective of the ups and downs of the economy over the years. In fact, I’ve just returned from one of my regular trips to South East Asia and was delighted to find that interest in London property investment remains as high as ever, whether as a source of rental income, for capital growth or as a home for children studying in the UK. We all need somewhere to live and the picture in terms of house price and rental income growth in London, suggests a positive outlook for investors with rents looking certain to push upwards as the squeeze on stock really bites in 2019.
If you have a property completing soon in a new development in London, please do get in touch with your nearest Benham and Reeves international office or any of our 16 London branches – our staff will be able to advise you on what rental you can expect to achieve. Or for an instant valuation, try our handy online valuation checker.
New phases of apartments are launching across West London residential developments, a relief as some of our branches remain very short of stock. In Hammersmith at Fulham Reach, where our local on-site branch is located, properties have been letting immediately and we are currently completely out of stock, with all apartments occupied. Tenancy renewals are extremely high at this development, with over 85% of current tenants renewing, adding to the stock shortages. At nearby Sovereign Court, new phases Beaulieu House and Montpellier House are now completing and properties are currently being furnished. We have waiting lists of applicants ready to move in as soon as furnishing is completed. In both developments asking rentals for a two bed property are £600 – £650 per week. With demand so high, rents are starting to push up a little now. In Ealing, rental demand at Dickens Yard is also extremely high and here too we are short on stock with over 90% of current tenants renewing their tenancies, little new stock is coming onto the market. Our Kew Bridge branch is in the same position – properties that do become available are letting instantly to corporate tenants. I have to mention here that these developments remain popular because of their location, their standard of appointment and outstanding on-site facilities. In all these areas, we are extremely keen to talk to landlords about letting their apartments.
And of course, Imperial Wharf and Chelsea Creek in Fulham remain as popular as ever, with good tenant demand although we have good stocks to fulfil this demand.
The City and East London
Our five City and East London branches continue to see strong rental demand and we have good stocks to meet this demand. Although the market is buoyant, generally rents have been flat this year and most landlords are becoming more realistic, recognising that their priority should be to find a reliable, long-term tenant at the current market rate rather than hold out for unrealistic rent increases. In order to maximise rental yields, the focus is on keeping a property tenanted and minimising voids. Renting to students has continued to dominate the market into the autumn, accounting for around 70% of tenancies in August, September and October at our City, Wapping and Surrey Quays branches. Most have excellent budgets and many still favour renting privately in a development rather than look for a flat in one of the many purpose-built student accommodation blocks springing up recently. Privately rented apartments usually have more space and offer more privacy.
In the City, our Fleet Street branch has had an excellent response to new skyscraper One Blackfriars, affectionately dubbed ‘The Vase’ which super-luxe accommodation and incredible skyline views. Despite high end rents, we’ve began letting studios for upwards of £700 per week, one beds for £825+ per week and two beds for £1200+ per week – apartments are letting very quickly and we are keen to receive new instructions here to fully capitalise on the buzz surrounding the development.
In Canary Wharf, London City Island continues to be very popular with applicants. It enjoys a spectacular riverside location and excellent amenities and, with rents from £375 per week for a one bed and £475 per week for a two bed, offers really good value for money. Apartments are letting within a week or so of being furnished. Launching soon at Surrey Quays is Marine Wharf East and, based on the current success of Marine Wharf, we expect high demand for apartments here. We are already receiving a lot of enquiries and this is another scheme where we have interested applicants waiting. One bed apartments are achieving upwards of £350 per week and two beds £425 per week and we really need more stock here.
The latest phases of London Dock in Wapping are completing – Ariel House and Admiralty House. These too are letting fast and are popular with both young professionals and international students. One beds are achieving upwards of £550 per week and two beds £725 per week. The latest phase of Goodman’s Fields, Kingwood Gardens, is also attracting a lot of interest and flats are achieving asking rental – one bed flats are renting for £575+ per week. Our Greenwich branch has seen rents soften a little at Royal Arsenal Riverside since the announcement that the opening of the Elizabeth Line (Crossrail) has been delayed until 2019. But even now the development is only a few minutes’ walk away from a DLR station and commutes to Canary Wharf by DLR are only 20 minutes, so canny applicants are spotting a good deal – with the same high specification homes at slightly lower rents than they will be next year. Rents are currently £275 per week for a one bed apartment so we are advising applicants to get in now for a good deal later.
North/North West London
In Colindale, rental demand continues apace at Beaufort Park, so much so that we have let almost all our stock and urgently need new instructions from landlords. We concluded a record number of tenancies in September – our busiest month on record since we opened the branch on-site in 2006. Students from China and the Middle East, together with professionals working in the City and from tech companies such as Google, make up most of this demand at the moment. The final, top floors at new buildings Argent House and Capri House launch in October so hopefully this will help to replenish stocks. In the meantime, we have waiting lists of applicants ready to rent flats as soon as they become available while tenants who need to find a home more quickly are looking at nearby developments which also offer a high standard of accommodation such as Colindale Gardens. Rental demand in North London is good for most types of property.
In particular, our Highgate and Hampstead branches are busy finding homes for professional sharers who are dominating the market at the moment, looking mainly for two bed, two bathroom properties. Especially popular are apartments at developments such as Woodberry Park and Highbury Stadium Square which are letting very quickly, with two bed properties achieving rents of £450-£550 per week. A new phase of apartments at Woodberry Park launched recently and all our instructions let very quickly – some applicants didn’t even view the property, often renting on trust after a recommendation from friends or colleagues already living there. A lot of interest is from professionals working in tech, banking and the financial services sectors.
We’ve also been receiving enquiries from relocation agents looking on behalf of families for large homes with asking rentals of £1000+ per week and single professionals with budgets of £350-£400 per week for a one bed property. Quite a few applicants are moving to Highgate from other parts of the UK.
The last few weeks have been frantic at our Kensington, Knightsbridge and Hyde Park branches, with strong rental demand from professionals, families and students. At one point, our Kensington branch had let virtually all of its stock although we have been receiving new instructions since and have good availability again.
Across many parts of central London, two and three bed apartments are most popular as we see increasing demand from professional and student sharers looking to reduce accommodation costs – this is the busiest time of year for students and graduates moving to the capital. Two bed apartments are achieving £500-£700 per week and three bed apartments £900-£1300 per week. Properties are now accurately priced and offer good value already, so most are achieving asking rental or close, with little room for negotiation. Applicants continue to move to central London from other UK cities, often looking for traditional properties with period features – high ceilings, large windows and ideally overlooking a garden square. This is the type of property that Kensington is known for and really appeals to tenants – although interiors must be well furnished and finished to a high specification.
Demand for apartments at Nine Elms on the South Bank is strong with properties letting extremely quickly, usually within days at most. With Vauxhall Tube station just a five minute walk away, this Zone One location is closer to central London than many people realise although, as we are now starting to see many tenants moving here on the recommendation, its popularity is growing rapidly.
Homes that attract a long-term tenant is an important concern for landlords and we are definitely seeing a high trend for second and third year lease renewals. The downside of this is lack of supply so if you currently have a property to let and you have not yet instructed us, please get in contact.
View all posts by Anita Mehra