Stagnation characterises rental market after Brexit vote

Despite forecasts of doom and gloom, Britain’s economy and housing market have proved to be surprisingly resilient in the face of the referendum vote. Although residential property prices have softened, George Osborne’s predictions of a house price crash have failed to materialise. Similarly, there has not been any widespread panic amongst investment buyers eager to offload their buy to let properties. Instead, stagnation characterises almost the entire market.

“Rents have flat-lined across most of the Capital” says Marc von Grundherr, Director, from Benham & Reeves Estate Agents “we are advising all our landlords not to ask for rental increases and if the tenant has been particular good then to even consider a slight decrease or some works to retain them and avert any void”.

According to the London-wide letting agent, most tenants are readily agreeing renewals. This is particularly noteworthy for this quarter when transactions are normally at their highest just prior to the start of the school year.

Only a few small pockets saw significant change this quarter. Wapping, which is undergoing a huge regeneration with the development of the former News International site, by St George, to create 1,800 new homes and 20,000 square feet of commercial space, is having a transformational effect on the area. Although residents have yet to move into the first phase of London Dock, rents in the area have gone up by 4.1%. Other new property developments nearby on the eastern fringes of the City have also introduced the area to a new breed of residents and the luxury flats are proving to be highly desirable.

Notably, rents in prime central London have fallen for the second quarter. An oversupply of rental properties in Belgravia, Chelsea and Knightsbridge continues to have a negative effect on rental values in the area. Already, Benham & Reeves Lettings has identified a number of apartments in these areas that are actually less expensive than equivalent properties in what might be considered emerging rental locations. “Prime central London arguably has the best value properties in the Capital at the moment” says von Grundherr “and transformed pockets of North West London such as Colindale continue to offer excellent returns for investors who got in there early”.

“If you look at most of the Heat Map, rents have stayed the same over the past quarter,” comments Marc von Grundherr of Benham & Reeves Lettings, “We’re in a period of uncertainty and fortunately, our landlords are listening to our advice when we tell them not to be greedy and simply value the tenants they have.”