Demand created by the return of professionals and international students to London is adding to the growing shortage of available properties to rent in the city and the market remains extremely challenging. In fact, as enquiry levels have continued to increase over the summer, across our nineteen branches, this is the most competitive London rental market that we have ever known.
At times, many of our branches have had almost no stock available – perhaps only one or two apartments left on their books. Many properties are renting within hours – and some within minutes – as applicants immediately make an enquiry as soon as a property goes live on our website. This is swiftly followed by a full asking rent offer and once agreed, a holding deposit – so anxious are they to secure a property. This of course is great news for buy-to-let investors who, in many parts of the Capital, are seeing their rental properties let immediately with voids at an absolute minimum. Sometimes just a day or two.
As a result of the imbalance between supply and demand, this is very much a landlord’s market, with rents rising to pre-pandemic levels over the summer and now at 10% higher in many cases.
Experienced rental property investors have already recognised that unprecedented rental demand makes this an excellent time to expand their London property portfolios. The weakness of sterling makes London property considerably more affordable for overseas buyers, while the shortage of rental properties means demand is the highest we have ever seen. This is partly due to the delayed completion of many new developments caused by Covid lockdowns, but also to soaring demand as professionals return to London and after two years of working/studying from home, international students are returning to their universities too.
Accommodation in London is hard to find right now and this is pushing rents up further while voids are almost zero for many landlords. And of course, London remains one of the most vibrant cities in the world and professionals and students are excited to again be enjoying the opportunities it offers.
International students have continued to drive rental demand in London over the summer and in some areas, including the City and East London, around 85% of applicants have been international students. While most students started their property search a couple of months before they wanted to move but even so, for many, this hasn’t been enough time as competition is fierce. Some don’t understand how competitive the market is right now, particularly in developments which have on-site facilities and are near good transport connections. In some cases they may have to increase their budget to find a home while others are choosing to move a little further out to find the right property.
With the rental market so competitive, tenancy renewals remain at an all-time high – often more than 90% of existing tenants are renewing as they recognise that, with such a limited choice of properties available, they are better off staying put rather than trying to find a new home in this competitive market.
This will mean agreeing to an increase in rent although in many cases this is simply a return to pre-pandemic market values or similar, after rents fell during lockdowns over the last couple of years.
This is peak season for international students looking for a rental property in the City and East London and the phone has been ringing constantly at our branches, with any rental property priced up to a maximum of £5,000 per month letting virtually immediately. We are seeing prospective tenants put in over asking rental offers in order to secure their chosen property. Often we will receive three or four offers on a property within the first half hour of it going onto our website.
Staff at our Canary Wharf, Wapping and City branches have never seen such high demand. At times we have had just a single apartment available to rent for an immediate move-in. Applicants are mainly looking at a wait of six to 10 weeks before a property becomes available and because almost all our existing tenants are renewing, very little new stock is coming to market. Around 85% of current applicants are international students – mainly from China. Typically, they are happy to pay a year’s rent in advance so they are a good option for our landlords.
We’re seeing over 80 completions taking place over the next few weeks at Merino Wharf (both at Merino Wharf and Merino Gardens) at London Dock in Wapping. London Dock is a very popular development for students and professionals so we have waiting lists of applicants waiting to move here. Currently we are achieving rents of £750 per week for a one bed apartment, £1,100 per week for a two bed and £1,300 per week for a three bed apartment. We would be very interested in talking to any landlords who are about to complete on an apartment at Merino Wharf as we already have applicants fully referenced and ready to move in on waiting lists.
Rental apartments at Nine Elms in Vauxhall are letting immediately – one and two bed flats priced at up to £800 per week are letting within minutes but within a maximum of one day. Most applicants are international students looking for a home that they can move into in September or October when the university term begins. Tenancy renewal rates remain very high so we have limited stocks coming back on to the market.
A new phase of apartments is now completing at DAMAC Tower, which has interiors designed by Versace Home – we have a number of new instructions here already but urgently need more to fulfil demand from applicants that we have already referenced and who are ready to move in to this stunning building. Please get in touch with our Nine Elms branch if you are completing on an apartment at DAMAC Tower soon.
The new sky lift will soon be launched at Battersea Power Station and this is really causing a buzz amongst existing tenants. It’s a great place to live and investors who bought in the first phase here are doing very well with yields above 5%.
In central London, our lettings teams in Hyde Park, Kensington and Knightsbridge are also very short of stock. Demand is high and generally our enquiries are from a mix of international students and professionals. We are also busy handling enquiries from relocation agents, enquiring on behalf of corporate tenants, particularly from the US, Australia and the Far East.
New apartment buildings and developments are most sought-after and White City Living in Shepherds Bush is one of the most popular. In Paddington Basin, West End Gate is seeing high demand, as too are Merchant Square, Paddington Gardens and Paddington Exchange, all in the W2 postcode. Typically, apartments in the Hyde Park area priced at around £600 per week for a one bed, £800 for a two bed and £1000 per week for a three bed are in highest demand.
Our Hampstead, Highgate and Beaufort Park branches are all seeing strong demand but stocks remain low. Flats are letting quickly and applicants are not trying to negotiate but are immediately offering full asking rent. Family homes in Hampstead and Highgate are letting quickly and we are seeing increasing numbers of corporate tenants moving to London on secondment. We have strong demand for homes to let in Dartmouth Park too but stock is rare and rather frustrating for a letting agent like us!
Stocks are also low at Beaufort Park in Colindale, with students driving much of the current demand. Flats are letting immediately and we have waiting lists of fully referenced tenants for both Beaufort Park, particularly Finlay House, Farington House and Fairbank House and Colindale Gardens, where the latest phase, Gladness House, is very popular.
Wembley Park, on the fringes of North West London is another area seeing massive regeneration and where demand is growing rapidly thanks to its high spec developments and direct transport links into central London and the City. Our Hampstead branch is handling lettings in Wembley and we’re seeing good demand from professionals from Hong Kong, who after renting here for a year, then look to buy a property in the area. 10 Watkin Road is particularly sought-after and we continue to receive new instructions here, having let almost 40 new flats since the current phase completed.
Our West London branches are super busy, with enquiries flooding in to our Hammersmith, Fulham Ealing and Kew Bridge branches. Most enquiries are from professionals and corporate tenants, with increasing demand too from international applicants, particularly from the USA and Hong Kong. Unfortunately, we just don’t have enough rental stock to meet this strong demand and this is a real issue for us and other letting agents in West London too. For example, our Fulham Reach Hammersmith branch recently had a local property which become available and the morning after it went up onto our website they had received 25 enquiries. It let immediately for above the asking rental. Currently, our branch here only has properties available to rent that will become available in one or two months’ time.
To overcome the lack of availability, many applicants are now happy to pay a holding deposit and secure a property simply on the basis of a video tour or even just after seeing the images on our website. Before the pandemic, applicants were not keen to do this but this method of viewing properties has become more normal now and it is really helping them secure their chosen property quickly.
In this fast-paced market, many landlords appreciate an up-to-date market review and guidance as to how much their rental property can now achieve.
Rents have increased considerably over the last few months, so if you have a new property completing or are about to renegotiate an existing tenancy, please get in touch with your nearest Benham and Reeves branch for a free, unbiased rental market appraisal.
View all posts by Anita Mehra