The London rental market – March 2018

After an unusually buoyant January, the last couple of weeks of February have been quite challenging. We’ve seen the usual, seasonal slowdown in demand for rental accommodation in many areas caused by the half term school holiday but this year it has been exacerbated by the extreme wintry weather which has made would-be tenants reluctant to head out into freezing temperatures to look for a new rental home. Realism is the key in this type of market and the most important consideration for landlords is to remain flexible and open to negotiation. Accurate pricing is essential to ensure a property lets quickly in this competitive market. Asking rents can change rapidly, even from week to week, so we recommend that landlords listen to their letting agent’s advice on current market conditions in order to minimise voids and so maintain a good rental yield even though rents are static.

Retaining a good tenant is another priority and again flexibility is essential. Landlords can usually achieve a better rental yield by retaining a reliable tenant at the same rent as the previous year rather than risking an expensive void period which will quickly eat into profits while they hold out for a higher rent that may or may not materialise.

The other question landlords should ask themselves is whether their letting agent has the expertise needed in a sluggish market. Clearly, experience in the lettings market is very important and so too is service. For example, many applicants and landlords now come from Japan, China and South East Asia generally so we have dedicated Japan and China desks, with staff who are fluent in the languages and completely understand the different cultures, simplifying the process for tenants moving to a new, often unfamiliar country.

London is a truly international city and offering services like these ensures overseas professionals and HR departments usually come to us when they are looking for a new London rental home – and that means our landlords often have access to a wider database of tenants – a vital competitive edge in a challenging market.

West London

West London is an area where we continue to see steady growth in rental demand due to the number of new residential developments springing up and improving transport links. Demand here is not always as affected by seasonal fluctuations as some areas and a case in point is our Dickens Yard branch in Ealing which has had an exceptionally busy few weeks, in fact, the branch has just recorded its best ever January and February figures, smashing its previous record. This is due to good stock levels matched by strong enquiries from corporate tenants, many from Japan. Apartments are letting within days. Nearby, at Kew Bridge in Brentford we are also seeing good demand but applicants are increasingly expecting to negotiate rents down a little so landlords must be flexible to ensure their apartment lets quickly.

At Fulham Reach in Hammersmith, new apartments are launching on the sixth and seventh floors of Faulkner House and we are receiving plenty of enquiries for these. New apartments are also launching at Marquis House and Lancaster House, both at Sovereign Court, a brand new scheme which we are busy marketing to drum up interest here. At the more established Imperial Wharf and neighbouring scheme Chelsea Creek, demand remains steady and apartments are letting well as long as they are priced accurately in line with market rents. Such is the popularity of this development, existing tenants tend not to move on frequently and so tenancy renewal rates are high.

Central London

After a slight lull in February, our central London branches are seeing enquiry levels pick up now as tenants start to show renewed interest in moving home. Our Hyde Park branch has received a lot of new instructions recently so has plenty of choice for new applicants, and we have noticed increasing numbers of professionals moving to London from South East Asia, the US and India recently. The properties letting most quickly are smaller one bed apartments at the lower end of the price spectrum – £300-£400 per week, while premium properties renting for £1500+ per week to company directors and senior executives are also doing well. With most tenants keen to keep accommodation costs down, tenancy renewal rates remain extremely high at almost 95% for those who have completed their first year.

In Knightsbridge and Kensington, demand remains highest for smaller one and two bed properties and affordability is the priority for tenants. Generally, the central London rental market remains very price sensitive though and applicants understand there is stiff competition amongst landlords so they expect to negotiate. Expectations are also high in terms of presentation which must be immaculate to ensure a property lets quickly. South of the river at Nine Elms Point near Vauxhall Tube station, rental demand continues to grow and an interesting trend is how often we are now finding that applicants are moving here from central London, looking for more affordably priced rental properties as well as the amenities and high spec of a new development. Its’ zone 1 location make it a great discovery and we are seeing a lot of interest from tech-workers here.

The City and East London

The first two months of 2018 have been very positive for our City, Canary Wharf and other East London branches, with strong rental demand balanced with good availability of properties generally. Our Wapping and Surrey Quays branches have the advantage of handling properties that are in an excellent location for professionals working in the square mile and in Canary Wharf. And there is good demand for apartments which are achieving market rentals. There are new units completing at London Dock while new apartments at Barts Square and Blackfriars Circus are also generating a lot of enquiries. To the east of Canary Wharf, the Royal Wharf development in E16 is changing the demographic of an area that even just a couple of years ago few tenants would consider. Today though, professional tenants are prepared to travel a little further in exchange for affordably priced yet high spec apartments that are within easy reach of Canary Wharf.

We have shortages of stock in Surrey Quays where demand continues to outstrip supply. Apartments here are letting in less than a week and we have waiting lists of fully referenced tenants waiting to move into properties in both these locations. A new phase of one bed and Manhattan apartments is due to launch at Royal Arsenal Riverside in Woolwich in June and this should help to ease the shortage of stock.
With many tenants looking to reduce accommodation costs, tenancy renewals are high at up to 65% across East London – most are choosing to stay put unless they are moving away from London. Many are happy to commit to a longer tenancy now too – often two years – as long as there is a break clause to provide flexibility should they need it.

North London

Enquiry levels are picking up in Hampstead and Highgate and the outlook for the year is positive. We have been receiving a lot of new instructions so have good stocks to meet this growing demand which is mainly for one and two bed apartments (which always fly out) and also for three bed properties which are letting quickly to families who wish to be close to the area’s excellent schools. Applicants’ budgets are fairly good but generally the market is price sensitive and most expect to negotiate with landlords. Properties must be priced accurately in order to let quickly so it is important for landlords to listen to the advice of their letting agent concerning current market conditions which can change even from week to week. Presentation is also extremely important and is often the deciding factor for tenants viewing two very similar properties.

Our Beaufort Park branch in Colindale is looking forward to the launch of its latest building, Sterling House, just a few weeks away now in April. With 18 floors, it is the tallest building at the development, and thanks to its panoramic views and high spec apartments, we expect demand to be high. We already have waiting lists of tenants for the building and will soon have plenty of stock to meet demand.

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.