Landlords Moving Out of London as Tenant Demand Slumps

Landlords are moving out of London to higher yielding locations across the UK, as tenant demand slumps in the capital.

The National Landlords Association (NLA) is warning investors that the central London rental market is beginning to show signs of a collapse. The caution arrives following research that suggests the London property bubble could finally burst this year, which would significantly hit those with investments in the region.

Landlords Moving Out of London as Tenant Demand Slumps

Landlords Moving Out of London as Tenant Demand Slumps

New research from the NLA shows that the number of landlords in London reporting a rise in tenant demand over the past quarter has slumped by almost 30 percentage points when compared to the same period last year, down from 45% to just 17%.

The study also found that 40% of landlords in the South East have reported an increase in tenant demand over the past quarter – the highest reported across the UK – indicating that tenants are increasingly looking to move out of central London to more affordable locations.

The decline in tenant demand seen across central London coincides with a more conservative approach from investors to purchasing property in the capital in the coming months.

Just 5% of landlords who operate in London say they plan to purchase more investment properties in the next quarter – the lowest level across all regions and down from 15% this time last year.

In contrast, the proportion of landlords operating in the North East who plan to buy in the next three months has almost doubled, up from 10% this time last year to 19%. The number of investors in Yorkshire looking to buy has also jumped significantly, from 10% to 16%.

The NLA findings arrive as a recent report from Countrywide shows that that rents in London dropped by 2.9% over the past year.

The Chair of the NLA, Carolyn Uphill, comments on the worrying drop in tenant demand: “It looks like central London is simply becoming too expensive for most people, regardless of whether you want to buy, invest or rent.

“For many tenants, the practical solution of moving out of the city to more affordable suburbs with good transport links is becoming increasingly appealing.

“In turn, it seems that landlords have been quick to respond, turning their backs on the capital and looking to other areas where the upfront cost of acquiring property is lower, and the potential yields to be had are higher.”

It couldn’t be a better time for landlords in more expensive parts of the country to protect their incomes, as rents look set to hit an affordability ceiling.

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