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Home News Property market updates, Rental market update The London rental market 2017, a year in review

The London rental market 2017, a year in review

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Resilience has been the byword for the London rental market in 2017. In many areas, demand has been stronger than we anticipated at the beginning of the year, with tenancy volumes up 19.7% on 2016, while enquiry numbers were up 16.5%. Rental demand from overseas professionals remained high and while some areas saw a dip in the number of Europeans moving to London, we saw an increase in professionals relocating from the USA, Australia, Asia, South America, Japan and China. We also saw a huge jump in the number of mainland Chinese investor clients using our services – up 85% – indicating that they continue to see very good long-term potential in the London property market.

The ongoing tech boom, with firms such as Google, Facebook, Apple and Amazon setting up new London branches has had a noticeable impact, fuelling demand for high spec rental homes. 2017 was also buoyant in terms of demand from overseas students, with applicant enquiries up particularly in the City, East London and Beaufort Park in Colindale. Overall, our top performing branch was Hyde Park which covers W1, W2 and NW1 with transaction levels up 39.2% compared to 2016.

But, the rentals market remains challenging and price sensitive – increasingly, applicants know the market well and, with a wide choice of properties available to rent, they expect landlords to negotiate. As a result, rents have remained flat across the board, with many tenants renewing at the same rental. However, most landlords recognise the benefits of keeping their property tenanted, which usually ensures continuity of income rather than risking a void by holding out for a higher rent that may not materialise. Most of our London-wide lettings branches have been seeing the level of tenancy renewals increase and with some branches doubling their renewal rates compared to the previous year. Our average tenancy now lasts two years which is three months up on 2016 suggesting that renters are putting down roots in London for longer and perhaps have greater job certainty.

New-build property developments have been the success story of the year. We received 73.6% more enquiries for new apartments than for period properties. Urban regeneration projects such as Nine Elms and Battersea Power Station in particular have transformed areas which were previously down-at-heel, creating new rental ‘hotspots’ which are attracting very good demand from tenants. With these new property schemes very much our focus, 2017 saw the opening of our sixteenth lettings branch on-site at London Dock in Wapping which has been doing brisk business and performing well. Investors who have an apartment to let in London Dock or indeed at any of our other property development branch locations should call one of our local managers for a free rental valuation and advice about how to capitalise on the influx of tenants that we are seeing. We currently have more applicants than properties to let in most new-build locations.

City, Docklands and East London (City, Canary Wharf and Wapping)

Royal Wharf, E16

Our City, Canary Wharf and East London branches all performed well in 2017, seeing strong rental demand and high numbers of enquiries throughout the year. Across our East London branches, rental demand was up significantly on 2016. Demand from students rose again, and was up 11% on 2016. Add to this a number of major tech companies moving to London, fuelling a need for high quality accommodation for their employees where demand has been stronger than anticipated. These are trends we expect to see continue in 2018, and while Brexit negotiations may cause some uncertainty, for example some applicants are requesting six month break clauses to give them greater flexibility, we expect to see applicants continuing to look for high spec homes in good locations. With several high-profile developments launching or with new phases completing recently, including Royal Wharf in Silvertown E16, Goodman Fields in the City and Canary Gateway in Canary Wharf, we have good rental stock to meet this demand.

Our branch at London Dock in Wapping has seen a fantastic response and demand is continuing to outstrip supply. We are very pleased with the rents landlords are achieving here. Rental demand has been good in Canary Wharf, particularly for one and two bed apartments, and we are also seeing higher numbers of tenants renewing their tenancies – at around 48% this is up 5% on 2016 – as they opt for stability against a changing economic background. Generally, we have continued to see applicants pushing further east in search of more competitive rents. Many have been drawn to the new apartments launching at Royal Wharf in E16 which offer a high spec and excellent value for money.

South East London (Surrey Quays and Greenwich)

Demand for rental apartments at Surrey Quays and the surrounding environs went from strength to strength in 2017 and stock levels have now become extremely limited at Marine Wharf where our lettings branch is situated on-site. The development has proved incredibly popular, particularly with professionals working in the tech sector and in nearby Canary Wharf. Demand has been difficult to meet throughout the year as we have a regular flow of registered applicants waiting for one, two and even three bed apartments. With demand so high we don’t expect stock levels to improve until the next phase of apartments at Marine Wharf East which launches in mid-2018. Applicants have also continued to push further east towards Greenwich and also Woolwich where they can find more affordability. The new phase of apartments at one of the area’s landmark developments, Royal Arsenal Riverside, has attracted a lot of interest and apartments have been letting quickly. Some of the apartments feature furnishing packages that we have installed here have been let with just a few days of completion and so we do recommend that landlords think about the presentation of their properties, particularly when they are entering the completion stage as many others in the same building.

South West Central London (Nine Elms and Imperial Wharf)

2 bed to rent at Battersea Power Station

Nine Elms has seen a year of phenomenal growth. At the start of 2017 the first apartments were completing and rental demand had not properly established itself. Since then, with the launch of Battersea Power Station and the second phase at Nine Elms Point, these landmark developments have seen increased activity with enquiry levels growing steadily each month with the summer months being exceptionally well paced. Publicity from the developers and word-of-mouth recommendation has played a large part in the area’s rapid growth in popularity. It’s Zone 2 location and good connectivity is still being discovered and tenants living there tell us they are enjoying part of a new vibrant location, so close to the centre of London. We have had good stocks to meet rapidly increasing demand and apartments have been letting as soon as they have come onto the market. We have had waiting lists for one bed apartments, the most popular property type at the moment. Interestingly, quite a lot of tenants took out a two-year tenancy when they moved into their new homes so most tenancies have not yet come up for renewal.

Our branch at Imperial Wharf and Chelsea Creek saw transaction levels increase by over 30% in 2017 – tenants have had lucrative budgets although and this comes with high expectations concerning standard of presentation. The market is price sensitive, however, apartments priced realistically in line with the local market conditions have been letting well, usually within three or four weeks and increasingly we have been finding that landlords who understand the rental market well recognise that with a good choice of properties available to tenants, they must be prepared to negotiate to secure a tenant quickly. This degree of flexibility on both sides has ensured a buoyant rental market. Throughout this year we have seen a continuing trend towards longer term tenancies and around 74% of tenants are renewing, indicating a preference for stability.

West London (Ealing, Kew/Brentford and Hammersmith)

2 bed to rent at Vista House, W5

New property developments in West London have continued to attract increasing number of applicants, both professionals moving out of central London and overseas professionals moving to London for the first time. While 2017 got off to a slightly slower start than usual (probably due to Brexit uncertainty) demand picked up steadily throughout the year and the second half of the year was much busier, with September and October the two busiest months of the year. Our Ealing branch at Dickens Yard saw the launch of the new Vista Apartments and demand here was very good – applicants are usually happy to pay a premium for a brand-new property. Our Kew Bridge branch has also seen apartments letting quickly and the launch of the Heritage Walk apartments at Kew Bridge West was a highlight of the year, attracting a lot of interest from tenants. Throughout these developments, tenancy renewal rates have been high, at 78% – with renting now a long-term option for many professionals, once an applicant finds a property and a development they like, they usually prefer to stay long-term and our average tenancy tends to be at least two years. Landlords find this preferable too as it means void periods are limited. It was also a good year for our Fulham Reach branch in Hammersmith, with strong demand and the volume of lettings we concluded increasing by 18% over 2016. Enquiry levels rose steadily throughout the year as the development’s reputation grew and we saw increasing demand from applicants and relocation agents, with more and more existing tenants recommending the development to friends and colleagues. As a result tenancy renewals increased dramatically over 2016, up over 30% to 70%, a clear indication of how happy tenants are living at the development.

Central London (Knightsbridge, Kensington, Hyde Park/Paddington)

Our Hyde Park branch has had a very strong year and was our top performing branch, with transactions up by 39% over 2016. We had a good start to the year and this continued into the summer and autumn, which were busier than usual. Small and medium-sized properties priced at up to £1,000 per week were most popular although we also had good demand for premium properties too. In November, we broke our own record for the highest number of tenancies ever agreed at the branch. In terms of developments, the launch of Camden Courtyards in NW1 was a highlight, attracting good demand from applicants. Around 90% of our applicants specify a preference for an apartment in a new-build development. In line with many other of our branches, we have seen tenancy renewals at a very high rate, of almost 90%.

Overall, 2017 has been a challenging year for our Knightsbridge branch but we have been working hard to secure tenants for landlords. Brexit uncertainty has meant that the times when we would normally expect peak numbers of enquiries have shifted so the rental market has been harder to predict than usual. However, the last two quarters of 2017 were incredibly active, with demand highest for studios, one bed and reasonably priced two bed apartments. Apartments priced from £300-£650 per week have been most sought-after, particularly those in established period buildings. Generally, tenancy renewal rates have remained high at 75% to 85%. Most tenants are keen to save themselves the hassle and expense of moving home, instead choosing to negotiate a small increase in rent with their current landlord. Retaining a reliable, long-term tenant is usually a good solution for landlords, eliminating costly void periods. Our Kensington branch has seen good demand this year, although with a wide choice of properties available, tenants are in a good negotiating position. One development which stands out as being particularly sought-after is 375 Kensington High St, always a favourite with tenants. Warren House in W14 has also been extremely popular, offering good value for money – we have often had a list of applicants waiting to move into this building, unwilling to consider anywhere else. In a very competitive rental market, it has been more important than ever for landlords to realise that a property must be finished to a very high spec in order to compete with new build and refurbished properties in the area. Applicants will pay a premium for a property if it is finished to an exceptional standard.

North/North West London (Beaufort Park, Hampstead and Highgate)

1 bed at Goldhawk House, NW9

2017 was another good year for our Beaufort Park branch in Colindale with excellent rental demand throughout the year and enquiries up on 2016 which itself was a record-breaking year for us. Generally apartments have been letting quickly, usually within 10 days. September was our busiest month and we concluded our highest number of tenancies ever during a single month. Student demand was up around 20% over 2016. With plenty of availability at new buildings Golding House and Goldhawk House stock levels have been good. This year we have seen increasing numbers of enquiries come through word-of-mouth referrals from tenants who are already living at the development. We are also seeing enquiries for other new builds such as Colindale Gardens and Pulse. Our Highgate branch saw the number of tenancies concluded rise by over 10% this year compared to 2016, with steady rental demand throughout the year. Demand was higher than usual over the summer months and we found that those applicants viewing properties were serious about moving home and were not simply ‘browsing’. Properties on average have been letting within two to three weeks. We also saw more relocation agents looking for properties than in the previous year. We usually have a number of apartments in new developments such as Highbury Stadium Square and Woodberry Park and as usual these have been letting very quickly. The latest phase of apartments to launch at Woodberry Park, Skyline, has had an excellent response from applicants and an apartment in this phase has typically been letting in just two days or so. In nearby Hampstead, our Heath Street branch also saw the volume of lettings increase by just over 10%, seeing particularly strong demand in the spring although rents have softened a little. Enquiry levels have been good throughout the year but the market is competitive and tenants expect to negotiate with landlords. Developments on the outer fringes of Hampstead such as Beaufort Court in West Hampstead, Argo House in Kilburn and Kilburn Quarter, also in NW6, have continued to be extremely popular, with applicants preferring the high spec and amenities they offer.
As we continue to look ahead, we remain committed to helping tenants and landlords find the tenancies that work for them.

If you have a property to let in any of these areas, or would like a free no-obligation rental valuation of your property please contact us. For more London rental market news and updates, subscribe to our newsletter.


About the Author

For 40 years Anita has been the driving force behind Benham and Reeves’ success as it has grown from a single branch in Hampstead, to one of central London’s oldest, independently owned sales, letting and property management companies. Anita's vision has driven the expansion of the business to offer a complete range of property investment related services from under one roof, from purchase to handover, furnishings and/or refurbishment to lettings and property management. Read more about Anita Mehra here - Read full profile