Rental Market Update – March 2014

Central London

After a very busy start to the year, we then saw a slight slowdown caused by the unsual levels of wet weather. Now though we’re seeing applicants returning to the market and demand for studios, one and two bed properties is high, with well priced properties being snapped up. The market is competitive though and both tenants and landlords are negotiating hard.

Even smaller properties will stick if they’re not priced correctly so we advise landlords to take note of market conditions and compromise if necessary – it’s preferable to take a lower offer from a solid tenant rather than hold out for a higher offer and risk a longer void period.

Around 95% of tenants are renewing their leases at the moment, keen to avoid the upheaval and costs of moving. Landlords recognise it is easier to keep a good tenant in place so are keen to reach an agreement with an existing tenant wherever possible.

New developments in central London continue to be sought-after. Demand is particularly buoyant in Imperial Wharf where we have an office on site at the development, with apartments letting quickly and strong competition between tenants. Much of this demand is from corporate executives and we’re seeing many applicants from City companies – finance, accountancy and law firms. The relocation market is very active with a high number of executives from the USA, Italy and Japan looking for rental properties at Imperial Wharf or Chelsea Creek. Around 80% of existing tenants are renewing their tenancies at the moment, a clear sign of the development’s popularity.

City, Canary Wharf, Docklands and Greenwich

Rental demand is growing rapidly across the City and Docklands, with several applicants registering for every available property. Young professionals are the driving force behind this demand and unsurprisingly one bedroom apartments are in highest demand – we are very low on stock and need smaller property instructions to meet demand.

The Square Mile is the most well-known financial district in the world so it’s not surprising so many applicants (around half our tenants) are drawn here from overseas – most are here on secondment for a few years so they rent rather than buy while in London.

South East Asian investors continue to dominate the rental investment market. We have several clients who own multiple units across East London and who regularly expand their portfolios as new residential buildings come onstream. We’ve recently seen an 9% increase in instructions from first-time investors new to the London property market which is encouraging.

Demand just keeps on growing for rental apartments in Greenwich too. We’re now seeing around eight applicants for every property so are actively looking for new instructions. The area’s open green spaces, in particular Greenwich Park, are a real draw, as too is the short commute to the City and central London which takes less than 20 minutes.

North/North West London

Rental demand in Highgate is buoyant, particularly for one, two and small three bedroom properties up to £600per week. With smaller properties letting so quickly, we’re now seeing a shortage particularly nearer the village. Around 70% of tenants are renewing their tenancies – with budgets still under pressure, most prefer to avoid the inconvenience of moving and this has become more of a recent trend. Most feel they will be able to agree a smaller rent increase with their existing landlord plus with limited supply they don’t want to risk a higher rental if they move elsewhere.

The market for larger family size homes is a little slower with some landlords considering selling up, keen to take advantage of the rising sales market rather than updating their properties to help them let quicker. We’re also seeing some existing tenants looking at buying a home thanks to the Government’s Help to Buy scheme.

Over at our Hampstead lettings office, we have also had a good start to the year. We have seen a large number of one and two bedroom properties come to the market in the NW3 postcode and have been letting them quickly. Landlords are increasingly aware that the rental market is very competitive so are conscious that they need to maintain and present their properties to a high standard and this is being reflected in the quality of homes coming to the market like this lovely family home we’ve been instructed on in Perrins Lane which offers an enviable village location.

Demand for larger properties to rent in Hampstead is more seasonal and tends to pick up about Easter time. This is when executives with higher budgets start looking in earnest through relocation agents, allowing plenty of time to move home before the start of the autumn school term. Having said that, we have let several larger family homes recently including a beautiful five bedroom house – a corporate let to an executive from a large, international company.