Rental Market Update – December 2013

Central London

Demand is high for premium homes to rent in Knightsbridge. In terms of rental demand generally the market is polarising at the moment. On the one hand we’re extremely busy working with international business people relocating to London, particularly executives from the US, Europe and Asia. For example, we recently let two apartments at the Knightsbridge, one at £5000pw and one at £6000pw.

At the other end of the Knightsbridge rental market, enquiries are also very good for studios and one bed apartments however younger professionals’ budgets remain under pressure, probably due to lower starting salaries for recent graduates, so we’re advising landlords to be flexible on asking rentals. If a tenant can’t afford a rental property in their chosen location, maybe Sloane Avenue which is very popular, we’ll advise them to look at a property in a neighbouring area like Earls Court which is cheaper but somewhere they might not have considered before.

Younger renters often prefer a new build property, they like the high spec and the security it offers, but they also appreciate the convenience of a concierge so developments like Chelsea Bridge Wharf are popular. Senior executives on the other hand tend to prefer more exclusive, period properties, with traditional architecture and a more bespoke, unique feel that reflects their status.

At our Hyde Park office, we’re seeing similarly high demand for new build properties. Overseas professionals and students often go for a new build as they like everything brand new while the lateral living it offers is more the style of living they’re used to at home. Developments such as West End Quay and Sheldon Square in Paddington Basin and Orwell Mansions in W10 are very much in demand for this reason. Enquiries for rental apartments near Hyde Park are busiest for apartments priced from £395-£425pw.

City, Canary Wharf, Docklands and Greenwich

Rental demand in East London remains strong, particularly from professionals and corporate tenants. Cheaper properties to rent in East London have outperformed the rental market generally, as tenants seek to reduce accommodation costs wherever possible. Budgets remain under pressure and tenants are looking for the best value for money they can find. East London has benefitted from this trend particularly as increasingly applicants look to areas like Bow, Poplar, Lewisham and Greenwich where rents are lower yet the quality of new developments is similar.

Another growing trend we continue to see is the emphasis on showhome standard properties. Applicants are used to seeing very high quality properties online and they’ll only view properties in person if they present well and meet their high expectations. That means that the quality of furnishings and presentation generally is more important than ever. Overseas landlords seem to understand this completely and almost always use specialist interiors firms to furnish their properties. This investment in presentation really shines through in the appearance of the apartment and professionally furnished properties always let more quickly. In contrast, UK landlords seem to be tempted to save money by furnishing a property themselves and the result is rarely as good – poorly furnished apartments tend to attract fewer viewings which usually results in them being slower to let. If you’re aiming for a professional tenant, you really do have to pay attention to these kinds of details.

Demand at our new Greenwich office is soaring, with rental apartments in Greenwich letting very quickly. Marine Wharf, Royal Arsenal Riverside and New Capital Quay are high on the wish lists of many applicants and clearly the riverside location of many of these developments is a huge attraction. Property prices are lower in Greenwich than in many areas which means that landlords are achieving rental yields of 5%-6% and of course, capital growth is also likely to be very good.

North/North West London

Larger family homes (£1250pw-£2000pw) have been letting very quickly in Hampstead and there is now quite a shortage of this type of property. As a result, applicants are having to make a decision and act fast to secure their chosen property. Houses in Hampstead Village, as ever, are in particularly high demand.

The market has been slower for one, two and three bed apartments but that isn’t unusual at this time of year. By December, most tenants have already found a new home ready to move in before Christmas and the next busy period will come in January. The quality of applicants is very good though and at the moment, for example, we’re seeing a high level of enquiries from the finance industry such as investment bankers.

After the usual Christmas lull last year, January 2013 saw us flooded with applicants and we expect 2014 to be similar. We tend to receive high numbers of enquiries about accommodation to rent in Hampstead over the holiday period and then really hit the ground running in January, having to move fast to match tenants with properties. The high rental demand in January means properties let very quickly at this time of year.

With plenty of stock of apartments at the moment, the rental market is competitive though and tenants can afford to be choosy so we are advising landlords to be realistic about asking rentals to reduce void periods. As many landlords with rental properties in Hampstead tend to own a portfolio of properties, with a low level of borrowing, they can afford to be flexible in terms of asking rental, which is a huge advantage for them.

The rental market in Highgate is very similar and again larger properties have been in high demand recently. New developments remain popular too, particularly with young professionals who enjoy the high spec and the amenities they offer. Developments like Beaufort Park in Hendon are popular as they offer an easy commute to the City. With fewer developments in areas like Highgate, the popularity of Highbury Square and Woodberry Park continue unabated.

Across North London, the rental market can change quite rapidly though so we have to be prepared to act quickly to work with market conditions, advising landlords on a suitable strategy to get the most out of the rental market.