The London rental market is more fast-paced than ever

It’s very much ‘business as usual’ in London now, the city is buzzing with life and professionals are returning to the office, so the demand for good rental properties is growing still further.  As a result, the shortage of rental properties in London is continuing and many of our 19 London lettings branches now have very few properties available to rent, so serious is the lack of supply.  As so few properties are entering back into the lettings-cycle, this is a city-wide problem that is facing all lettings agents in London so many tenants are really struggling to find a home.

Stock levels at an all-time low

With stock levels so low across London and 85-90% of our existing tenants renewing their leases, demand continues to far outstrip supply.  Enquiries for properties in residential developments are highest – so this does put us in a stronger position than other letting agents.  Many of our estate agency branches with lettings teams are situated on-site at top property developments – exactly where buy-to-let investors target and where professional tenants want to live. This means that applicants talk to us first when they are looking for a new rental property as we usually have the widest choice when there is stock.

We cover all of London so if you’re a landlord about to complete on an apartment in a new development or any type of property, please get in touch with your nearest Benham & Reeves branch, we’ll almost certainly have a referenced tenant ready to move quickly.

Properties letting within a couple of viewings

Applicants recognise how frenetic the rental market in London is, so they are fully prepared and ready to make an offer and pay a holding deposit as soon as they see a property they like. This may mean putting in an offer on a property that they have only viewed online or via a video tour and paying their holding deposit immediately – often within minutes – to ensure they secure their chosen property.  We’ve had no time wasters as applicants may have already lost out on a property previously because they didn’t act quickly enough so they want to avoid this happening again and don’t take any chances.

The trend towards longer tenancies

Many professionals want the security of a longer-term tenancy in this frenetic market.  Some are opting for two or three year leases as this will allow them the convenience of staying put, saving the considerable cost and hassle of moving.

Over 85% of our tenants are renewing their existing tenancies with increased rentals as finding a similar or better property at a similar rent to what they are currently paying will be almost impossible right now.

Many properties letting for above asking rent

Generally, we continue to see an upward trend in rents which are up to 5% higher than before the pandemic.  Many tenants are reaching their limit in terms of affordability, particularly as the cost of living crisis starts to cut deeper.  But because of the imbalance between supply and demand, we are seeing apartments let for above their asking rent, as other applicants try to outbid an offer already made.  Ultimately, it is the landlord’s decision as to which offer they will accept but there is an affordability limit which should be considered when setting the right rental and of course, the quality of tenant is important too.

Demand for rental properties across London

The City and East London

Demand for East London rental properties remains strong, with banking, finance, Fintech (financial technology) and tech professionals leading the field.  Around 48% of enquiries are from domestic professionals and the balance from overseas executives coming via relocation agents and our international network of HR contacts.  Although tenancy renewals of a second year remain high at around 65%, some existing tenants moving on, usually to the fringes of London, freeing up some stock, but we are still short of properties to meet demand.

Interestingly, a key trend amongst vacating tenants is the move to buy their own property now – this is currently the most common reason to vacate a property.

With business very much as usual in the City and Canary Wharf, and Londoners being encouraged to return to the office, at least part-time, there’s a real desire to live and work in the same neighbourhood.  The recent opening of the Elizabeth Line (Crossrail) is also transforming the London commute.  Our lettings branch at Royal Arsenal Riverside in Woolwich is seeing further growth in demand already, now that a commute to Canary Wharf has more than halved – from 30 minutes to less than 12 minutes.

So, just how strong is rental demand in East London?  To give you an example, we’ve just let a brand new two bedroom apartment at New Market Place in East Ham. We booked in 10 viewings but it let quickly to one of first to view it. The asking rent was £1,400 per calendar month but due to frenzied demand for it, we achieved £1,675 per month giving the landlord a very healthy rental yield of 5% gross.

Stock levels are low at 250 City Road in Shoreditch and we have let all our current stock.  As I write, we have just one property becoming available in July.  Properties that become vacant let immediately, as long as they are accurately priced. The next phase, Valencia Tower, does not complete until early next year so stock levels will be limited until then and existing tenants are renewing.

Apartments at Merino Wharf at London Dock Wapping are completing and we’ve had a good response, with one beds achieving £675 per week and two beds upwards of £900 per week.

And at the new London Square Greenwich residential development, which starts completing this month, one bed apartments should achieve upwards of £2000 per month and two beds upwards of £2,400 per month.

So if any landlords are due to complete on an apartment at any of these developments, please get in touch as we have fully referenced applicants waiting for a flat to become available.

West London

Stock levels remain very low and at the time of writing, we have only six apartments available to rent across our five West London lettings branches.  Most apartments are achieving above asking rent.

New flats will be completing this month at Western Circus in Acton and Hayes Village, both Barratt developments, and we are already receiving good enquiries from locals who want to live in these schemes.  At The Green Quarter in Southall, we have let all our available stock, for full asking rental, with most flats renting within 24 hours of going on the market.   A Manhattan apartment is typically achieving £1,250 per calendar month.  This is a real rental hotspot and the recent opening of the Elizabeth Line (Crossrail) means its popularity is only going to increase as commute times into central London are slashed.

Apartments for rent at The Arc Tower in Ealing are incredibly popular.  We had a one bed flat to rent here and carried out four viewings – we received four offers and eventually asked for applicants’ ‘best offers’.  We then rented the flat for £100 per month over its initial asking rent.

At Fulham Reach in Hammersmith, we have very little stock available and there is little movement in the market as most tenants (around 90%)  are renewing their leases.  When an apartment becomes available it usually lets within a week or two at most.  Rents are 5% – 10% higher than before the pandemic.  Most new tenants are looking for a two or three year lease as they want the security of staying put in their chosen property for a while.

At White City Living and Television Centre in Shepherd’s Bush, we have let all our properties so have no new stock available, despite high numbers of enquiries that unfortunately we just can’t fulfil.  Most existing tenants at the developments have been renewing their tenancies.   With enquiries also now starting to come in from international students, we are asking landlords there to get in touch if they have a vacant property.

Prime Central London

The central London lettings market is very busy and landlords are achieving good rents.  However, we have far more applicants than stock!  We’re seeing a mix of corporate tenants and wealthy international students, who are already looking for a rental property in time for the start of the University term in September.  We’ve had an influx of Chinese students recently so we it seems that many have already received University offers and are looking to find a home as soon as possible as they know the rental market is very competitive.

We’ve also seen quite a bit of movement in higher end of the rentals market successfully concluding a 5 Bed flat rental in Holland Park to an American lawyer at £5,600 per week and a 5 Bed Townhouse in Knightsbridge to a hedge fund manager for £12,000 per month.  Another luxury development completing now is 9 Millbank in Westminster where one bed apartments are achieving upwards of £1,000 per week.

Nine Elms

New buildings completing include Damac Tower, which has interiors by Versace Home, with one bed apartments achieving £800 per week.

At Battersea Power Station, we will soon have available a stunning penthouse, with four bedrooms, an office/annex and two huge terraces – this will be available to rent for £6,000 per week and is likely to let quickly as this iconic building is highly sought after.   New flats at Prospect Place, the latest phase at Battersea Power Station are renting almost immediately.  The new shopping centre at Battersea Power Station will be opening in September with shops, restaurants and a separate high street and this will make the area even more attractive to renters.

North & North West London

Across North and North West London we continue to see property shortages and we have very little stock available for rental.  New instructions rent immediately – certainly within days.  We’ve had several larger family homes on our books recently and these too have let immediately.  We’ve never seen such a high level of demand.   The Clarendon is a very popular residential development in Hornsey and we are expecting new instructions here over the summer.  We’ve had several new instructions at Woodberry Park in Finsbury Park which we received through clients at our international offices, but these let immediately and were not enough to meet the current demand.

Demand at Beaufort Park in Colindale is also extremely strong, with Hong Kong professionals coming on the BNO visa scheme continuing to move here as it is one of their favourite locations.  Apartments at Finlay House, the newest building to complete, are in high demand and our branch on-site we would like to talk to landlords if they have a vacant property anywhere in the development.

Ask your local Benham & Reeves branch for a free market appraisal

Due to the current high demand, we have fully referenced tenants waiting to move into new rental homes in all areas where there are good transport connections. So if you are completing on a new London property soon, or have a vacant apartment, contact your local Benham & Reeves branch for a free market appraisal.