London has seen something of a rental boom during the last three months, according to the latest analysis from the London Central Portfolio.
Figures from the Portfolio indicate that the number of properties to rent in prime central London has trebled during the period to hit 24,761. This was a rise form the 8,834 recorded in the previous three months.
A greater number have been taking out landlord insurance in prime central London. Despite uncertainty over Brexit continuing, stock levels of rental property in the region have increased dramatically.
It appears that many landlords have chosen to let their property as oppose to selling them in the current market. During the last three months, the number of properties to let has increased by almost three times.
With this increased competition, tenants are enjoying more choice, being particularly attracted to newly refurbished properties. In fact, rents for refurbished properties have performed the best over the last quarter, seeing a 3.6% rise.
One-bedroom properties have seen the strongest performance, with weekly rents for this kind of dwelling averaging £460. Two-bedroom properties have also become more popular, with weekly rents typically £700, up by 1.5% over the period.
Naomi Heaton, CEO of London Central Portfolio, noted: ‘Newly refurbished properties, in areas with good transport links, continue to attract tenants willing to pay premium prices. However, the squeeze on rents during the Credit Crunch as corporates underwent stringent belt tightening has not fully relaxed. This has meant small properties remain the most popular with the lowest void periods, now averaging 26 days for one-bedroom units. The influx of international students, the children of HNW families, often living on their own, has added to the demand. This month, during the rush period before the start of the academic year, we have let 55% of our properties to students.’
As supply levels have increased, rents for re-lets of older properties have remained fairly static during the last quarter.
Heaton continued by saying: ‘The static picture for re-lets can be attributed to the growing negotiating power of tenants as stock levels have trebled, many of which are ‘not-so-new’ properties. However, with tenants often electing to ‘stay put’ rather than deal with the hassle of moving, this has been compensated by renewal increases, averaging 3.1%, from tenants in-situ. Landlords, therefore, should look to retain existing tenants if possible rather than re-marketing in the hope of achieving higher rents. They may also need to be open to carrying out remedial and upgrade works between tenancies to remain competitive at re-let stage.’
Looking to the future, Heaton observed: ‘Across the rest of the year and into 2017, landlords may seek to recoup the increased entry and running costs due to the Additional Rate Stamp Duty and the forthcoming reduction in mortgage interest relief.’ She feels: ‘This may lead to a further hardening of rents across the board. For tenants with the flexibility to move, now may be the optimum time to secure the best deals before Landlords act to counter the tax headwinds.’