Low supply pushes London rents to giddy heights

A steadier economic climate leads us to believe that predictions of a housing crash coupled with double digit-inflation are way off the mark. That being said, the economic laws of supply and demand continue to dictate the direction of the London rentals market. Last month saw 16% of our pre-registered applicants still waiting for a rental property and with tenants eager to renew, it is a particularly good time to be a UK landlord.

As first-time buyers find it increasingly difficult to navigate the current high cost of borrowing, they are becoming resigned to the fact that a good chunk of their earnings will be going on rent. In London, this influx of fresh demand is set to keep rental prices buoyant in the year ahead and a 10% overall increase is definitely on the cards. Investors in buy-to-let properties were also affected by the hike in interest rates, but as some hesitated, others took their chances and are now well positioned to benefit from improved yields and push ahead with portfolio expansion plans.

The Elizabeth Line reigns supreme

Along the western sector of the Elizabeth Line, Ealing remains the standout performer with apartments letting straight away and waiting lists averaging a staggering 42 applicants per property. Rents are up 20% compared to January 2021 and we may see further rises of between 10 and 15% during the next big renewal period this coming spring.

Adjacent neighbourhoods like Southall, Harrow and Alperton where we have a lot of investor landlords, are also experiencing a mini boom as executives from the tech automotive industries relocate here from their India head quarters. Harrow Square, Eastman Village and Grand Union are particular popular. Green Quarter (Southall) and Hayes Village (Hayes) are both just a few minutes’ walk away from their respective Elizabeth Line stations.

The City of London remains the home of big business

Wapping remains something of a hidden gem and London Dock’s latest phase continues to roll out a tasteful line of luxury apartments. Close to the River Thames and within walking distance from the Square Mile, Merino Wharf is the latest to catch the eye of professional tenants. Goodmans Fields in Aldgate is also in high demand, being well situated near the Elizabeth Line and both developments now have waiting lists for rental properties.

Canary Wharf and the City are both financial districts where having an international network of offices really pays off. We have been getting a healthy supply of stock from our overseas teams with a high percentage of recent instructions coming from Chinese clients via our Shanghai office.

Just over the river in Surrey Quays near Canada Water, rents for apartments in Marine Wharf, where we have a branch on-site, are up 25% on pre-covid levels, with tenants having to renew at the full market rental due to lack of choice elsewhere. Landlords here are seeing good tenancy renewal rates, with many on their third or fourth year with the same tenant.

41% of tenants renewing for five years or more in Hampstead

In North London, our Hampstead branch enjoyed a lively start to the year. Despite a recent 20% increase in rents, one and two bedroom flats are being snapped up almost immediately. You could say that Hampstead continues to be a victim of its own success as nearly 41% of our tenants here have been with us for five years or more. A shortage of 2 bed apartments to rent here is acute at the moment.

Millbrook Park, a Barratt development in Mill Hill, NW7 is acting as a sort of luxurious overflow site for tenants who are determined to rent in a North-West postcode. Apartments here are being let at a prodigious rate, as professionals working for Facebook and Google cotton on to the fact that journey times into Central London compare well with most Zone 2 neighbourhoods.

Cost of living is a now a key issue

Across all our Tube Zone 1 & 2 branches, restricted supply equals rent increases as applicants compete for property and nowhere is this more evident than in central London. Higher rents will go some way towards offsetting the rise in interest rates, particularly for mortgaged landlords, but the impact of rent increases on tenants is crucial since a failure to pay rent on time is not something that any landlord can afford to overlook.

Our Japan Desk, which is situated in Shoreditch but houses Japanese corporates in other parts of London too, has had a phenomenal start to the year with 33% more tenancies compared with Jan 2022. The corporate transfer window will start again in March and April, so we are very interested in hearing from landlords who have a property becoming available soon to help with our growing list of enquiries.

Proposed Gov.uk Whitepaper

You may have heard in the media that there is ‘proposed’ legislation aimed at further protecting tenants’ rights. Called the Renters Reform Bill, many in the industry regard it as government overreach because the simplification and standardisation of tenancy agreements is already in place. The government has proposed that new rental properties will require an EPC of C or better by 2025 followed by all tenancies from 2028. The willingness of the government to force the issue may only last as long as the current housing minister stays in office which, judging by past events, might not be that long. We will of course keep our clients updated.

Don’t forget to furnish your buy-to-let balcony!

Wherever and whenever you choose to let property this year, we would advise you to maximise the potential of any outside space. High on the wish list of many applicants is the provision of a table and chairs on the balcony or terrace. What may seem to be a small detail might end up giving your property the boost it needs.

If you have a property to let or would like a free market appraisal, we cover all of London.  Contact your nearest branch to get an up to the minute rental from one of our ARLA Propertymark negotiators.