London landlords are keeping their rent prices on hold in order to maintain tenants at a competitive time in the lettings market, according to analysis from agent Benham & Reeves Residential Lettings.
With so much rhetoric throughout the property industry of a slowdown in the capital (which is causing the rest of the UK market to dawdle), the agent is assessing how different parts of London are really performing.
Benham & Reeves’ latest research, which covers the second quarter (Q2) of 2018, shows a neutral market, with many postcodes recording little or no rent price rises, while some have witnessed decreases.
However, the agent claims that the market is buoyant, with an increase in the number of tenants. Rent prices in areas like Zones 2 to 3, for instance, have grown, due to the amount of choice that renters have. With this in mind, Benham & Reeves advises landlords to take a closer look at the market to best work out how to protect their property investments.
Some locations, such as Acton and Ealing in W3, Wapping and Shadwell in E1W, and Earl’s Court, and Kensington and Chelsea in SW5, are showing reasonable rent price rises of 2%. These areas, with different qualities, from the royal connections of Kensington and Chelsea, to the metropolitan, urban feel of the Docklands, are continuing to attract tenants looking for high-quality rental housing.
Acton and Ealing are great examples of the Crossrail effect, whereby investors have purchased rental properties for the increased needs of tenants. Though it is not in operation yet (due December 2019), Crossrail is expected to make the areas even more desirable for renters, with good value rents, and easy access to east and west areas of London, with far shorter travel times.
Wapping and Shadwell are an easy hop to Canary Wharf, where many large, international businesses are based. Moreover, the areas themselves have experienced huge redevelopment in the past ten to 15 years and now offer riverside living at its best.
Value for money
Across the majority of postcodes in the capital, there is an even spread of between 0% to 2% rent prices rises, and between 0% to -2% drops. This neutrality is to be expected with so many new schemes rolling out at the same time.
Tenants are seeking value for money, especially as corporate budgets haven’t increased and they know that, in a tenant’s market, they can drive a hard bargain.
Many landlords are taking the decision to renew tenancy agreements with existing renters with no price rises, in order to keep good tenants and avoid potential void periods. Benham & Reeves has seen 17% of its landlords renewing their existing tenants with no rent rises for these reasons.
If you are worried about experiencing void periods in such a competitive market, then make sure that you are prepared. Our Unoccupied Property Insurance is there to keep your investment safe before it is tenanted again.
No drop in demand
Nevertheless, it is important to note that, though rent price growth is slow, there has been no drop in demand. The agent’s Nine Elms branch, for example, saw a 12% increase in May for one-bedroom apartments. Equally, its Colindale office witnessed waiting lists swell for smaller properties, with demand from City professionals and students.
As a result, despite the overall neutrality of rent prices in the capital, Benham & Reeves believes that the slowdown is no real cause for concern.
However, there are some areas that are experiencing surprising rent price drops. Locations such as Golders Green, Hampstead and Barnet in NW11, Marylebone and Westminster in W1H, South Kensington and Knightsbridge in SW7, Hammersmith & Fulham in W6, Barnes and Richmond upon Thames in SW13, and South Lambeth, Vauxhall, Battersea, Clapham and Stockwell in SW8 have all witnessed rent price declines of 4% and over.
Marc Von Grundherr, the Lettings Director of Benham & Reeves, says: “The drops are all in desirable areas that continue to be very popular. What we are seeing is more stock coming to the market, thanks to large developments, and that is giving tenants more choice on places to rent and more power to negotiate lower rents.”
The advice to landlords in these areas, and across London, is to ensure that your properties are maintained and presented well. Keep them decorated and furnished in line with interior trends and to a high standard, and make sure that they are offered for a reasonable rent price.
Remember, if tenants have greater choice, it is important to make your property one that they won’t want to miss.