The London rental market – January 2018

It may be almost impossible to pick up a newspaper without reading about Brexit, but for most professionals life goes on as normal and so the demand for rental accommodation in London remains strong, principally due to a continuing shortage of housing stock, lack of affordability for homebuyers and the need by tenants for flexibility to accommodate more fluid lifestyles. As a result of this continuing high demand, our view on the London rental market in 2018 is that the year will continue in a similar vein to 2017.

Additional housing stock will, of course, come on to the market offering a wider choice of rental properties for tenants but this will impact on landlords by creating downward pressure on rents. Landlords will therefore need to be open to offers from prospective tenants in order to ensure their apartments let as quickly as possible or face the prospect of a void. We also expect to see landlords continue to prioritise retaining existing tenants where possible to maintain a continuous income stream and to keep void periods to an absolute minimum.

Excellent presentation will be more important than ever – either to differentiate an apartment in a new building from the many others coming to the rental market at the same time – or in the case of older properties, to compete with these new-builds which most tenants now prefer.

Areas of urban regeneration will continue to create new rental ‘hotspots’ across the Capital – from high profile schemes such as Nine Elms and Battersea Power Station to the ever changing landscape of Docklands and East and South East London where new developments are attracting increasing numbers of London professionals in search of high quality rental accommodation at affordable rents. This of course leads us to the opening of the Elizabeth Line (Crossrail), whose new faster links across the London will further open up new rental ‘hotspots’ along its route when it is anticipated to open at the end of 2018 – from Ealing in West London to Woolwich in East London.

In terms of tenant profiles, we expect to see growing demand from students, many from Asia, who highly value a British university education and for whom the vagaries of European politics have little importance. We are also seeing increasing numbers of Japanese corporate tenants moving to London and we have our dedicated Japan desk in order to help them through the process of finding a new rental home and helping with settling in. And of course, we continue to see large numbers of domestic tenants (both from London and from other parts of the UK), as well as the USA. In fact, in some respects we are now seeing a return to the rental demographics of the late 1990s where applicants from the US and Japan dominated the prime central London rentals market.

The impact of Brexit is likely to become clearer this year although in the meantime, most tenants are asking to renew their leases, looking for security until their job situation is more certain. However, as it now looks unlikely that banks will have to move to a different European city after we leave the EU, we are expecting growing confidence amongst tenants. So while 2018 is likely to be a year of challenges in a highly competitive market, demand is likely to remain strong and there will be some real positives, notably renewed interest from overseas applicants from outside the EU and, with rents correcting themselves in 2017, a more stable period for landlords.

City, Docklands and East London (City, Canary Wharf and Wapping)

Rental demand in the City and East London has bounced back after the holiday period and we are receiving plenty of enquiries, in line with previous years. We have reasonable stock levels but are looking for new instructions. Blackfriars Circus in SE1 (Zone 1) will be completing soon and is being handled by our City branch – we expect demand to be high and one bed apartments are likely to achieve upwards of £495 per week. Meranti House at Goodman Fields in the City is completing now and demand is good, with apartments expected to achieve upwards of £575 per week. New apartments at Windlass House at Royal Wharf in E16, close to our Canary Wharf branch, are also completing, offering excellent value at £300+ per week for a one bed apartment. We are also looking forward to the launch of new apartments at Admiralty House at London Dock in Wapping where one bed apartments are letting for upwards of £550 per week and Manhattan apartments for £495 per week.

South West Central London (Nine Elms and Imperial Wharf)

After a year of exceptional growth in rental demand in 2017, we expect apartments at Nine Elms and Battersea Power Station to continue to attract increasing numbers of enquiries from applicants. Nine Elms has become one of London’s most exciting areas of urban regeneration and with new developments such as The Residence, Keybridge and a new phase at Embassy Gardens opening over the summer, demand looks set to grow further. We’re also excited to be launching an impressive 4,000 sq ft penthouse apartment at Battersea Power Station which will be the real jewel in the crown. With a large roof terrace, jacuzzi and panoramic views, this stunning home will be available to rent later this month. Further along the river, Imperial Wharf has been a rental hotspot for over a decade now and as we would expect, 2018 got off to a strong start both here and at neighbouring development Chelsea Creek.

South East London (Surrey Quays and Greenwich)

Rental demand remains high at Surrey Quays and we have shortages of stock here – we hope this will ease in the summer when the next phase of apartments, Marine Wharf East, launches. Greenwich and Woolwich remain extremely popular and demand is buoyant at Royal Arsenal Riverside in Woolwich where a new phase of apartments launched recently. This is one of the areas that will benefit hugely from the opening of its own Elizabeth Line station later this year.

West London (Ealing/Kew/Brentford and Hammersmith)

Demand for apartments in West London has got off to a good start in 2018. There are over 200 apartments completing at Sovereign Court in Hammersmith over the next six months and around half of these will be available to rent. Our Fulham Reach branch will be letting many of these and with high demand at the development, the boost to housing stock there will be very welcome. Apartments here are particularly popular with Japanese tenants. Nearby, Kew Bridge in Brentford remains perennially popular, as does Dickens Yard in Ealing, West London where new units at the Vista apartments are now completing, with one bed flats achieving £375-£400 per week.

North/North West London (Highgate, Hampstead and Beaufort Park)

Our Highgate and Hampstead branches have had an extremely good start to the year, with strong enquiry levels leading into January and demand buoyant – for one and two bed apartments as well as larger properties including four bed houses and apartments. Clearly demand for smaller properties is from young professionals and couples but interestingly, we are seeing more enquiries for larger homes than we would expect at this time of year – from families who are moving specifically to be within the catchment areas of local primary schools well ahead of the September term. With properties letting well and demand high we are running short of properties now and looking to replenish stocks. At Beaufort Park in Colindale, rental demand at the start of 2018 continues to gather pace. We are awaiting the launch of Sterling House in the spring and this is likely to generate a lot of interest from the many applicants who prefer to rent a brand-new property.

Our Kensington, Knightsbridge and Hyde Park branches got off to a good start in January, with applicants busy making enquiries and keen to move home to start the New Year. We have also been receiving a lot of new instructions so have good stocks to meet demand. Generally there is quite a lot of movement in the rental market and the outlook for 2018 is positive, with applicants looking for a new home in central London often keen to move to either a larger property or a refurbished one, upgrading from their current home. New developments of course remain extremely popular so landlords who own older properties in the area must recognise that a period home must be refurbished to a very high standard to compete with these and other new builds. Applicants will pay a premium for a property if it is finished to an exceptional standard.

If you have a property to let in any of these areas, or would like a free no-obligation rental valuation of your property please contact us. For more London rental market news and updates, subscribe to our newsletter.