The London rental market is showing no signs of slowing down. In fact, demand for rental properties in the Capital is still at an all-time high, far outweighing the supplies available in the open market. Looking at our own statistics across our 19 London Branches, new rental listings have decreased by 18% in comparison to Q2 2021. And with the rise of interest rates, the tables have turned, now it is more cost effective to rent rather than to buy and financing a mortgage for the same amount of outlay. This is a reversal of pre-pandemic conditions and mostly applies to London, where the property value are higher than most parts of the country.
Looking at our lettings database, majority of our apartments were let within one to two viewings, and sometimes our team will have units being offered from applicants on our waiting list, and the offer was agreed without even had the chance to be listed on our website. London is on its way back to normality, and we don’t see the shortage of rental properties in London easing for the foreseeable future.
Several new buildings or new phases at existing buildings are completing soon, but this will only bring a small fraction of properties to the market, we are desperately looking for new stocks to satisfy the need of the thriving rental market. If you have a property looking to let out, or have a new property completing soon, please get in touch with your local Benham & Reeves team for an up-to-date appraisal.
Residential tenants’ priorities are still changing
A crucial trend we’re seeing now is the gradational shift in tenants’ precedence as they acclimatise to a new post-pandemic life. And there are some intriguing changes in precedence then. While the desire for further space (both outdoor space and a work-from-home space) continues, it is frequently no longer be seen as essential as it was. And clearly not if it means a much premium rent.
Affordability is a growing issue for applicants now and numerous have more defined accommodation budgets due to soaring inflation and the rising cost of living. So they will only wish to pay rent for space that they really need. If that means compromising by working at the kitchen table rather than a devoted office space (or a spare bedroom) then it is acceptable.
Lifestyle is now more important than ever. Some applicants are now looking for a home near their workplace, allowing them to be within walking distance back to their workplace – this can initially cut down the cost of travel.
The desire for a better lifestyle is also influencing some applicants to move from an aged property to a brand-new apartment in a development with high specifications and amenities, if they can find one. This too is not just a life choice, it is frequently a more cost-effective move too. A development closer to their office, with its own gym, pool and concierge could mean a tenant could cancel their gym memberships and cut costs on transportation so actually save more in the long run and maximise their earnings while enjoying a more advanced specification home.
Universities in London welcome back a new wave of international students
We have already seen a wave in rental enquiries from foreign students planning to move to London in September for the new university term and numerous students have been actively looking for a property since the beginning of the year. A lot of them have been advised by friends how problematic it is to find a rental property in London right now.
Those that can afford to are now signing a tenancy but taking occupation until September. Theypay to do so as to secure a property rather than find themselves without a home in early September when they arrive in London and need to feel secured.
We are also seeing a lot of enquiries from students formerly living in London who are now looking to move to a new property after their first year, because they were rushed into making a fast decision the previous year and are now not satisfied with their current accommodation.
Want to know more about location specific rental updates in London? Read our next article to find out more.
About the Author
With over 60 years of experience in London market, Benham and Reeves offers a comprehensive one-stop service which includes London property sales (purchase and selling) and full letting and management services to investors. Benham and Reeves Hong Kong SAR office was established in 1995 to provide real estate agency services to Hong Kong buyers, sellers and landlords in regards to all their London property needs.