It seems that rumours of the decline in interest for the London property have been greatly exaggerated. Things are certainly slowing down in terms of sales as a careful re-balancing takes place, but the market is far from the dramatic compression that we experienced after the banking crisis in 2008. Any economic model is governed by the laws of supply and demand, so a shortage of stock will always affect availability and pricing. The London rentals market is like no other and it is a particularly advantageous time to be a landlord as around 16% of our pre-registered applicants were still waiting for a rental property at the start of January 2023 and our tenants have never been keener to renew their existing tenancies.
First-time buyers, currently locked out by high cost of borrowing, are also swelling the numbers of those looking for good-quality rental accommodation. This extra demand will certainly lead to a boost in rental prices in the year ahead and a 10% overall increase is looking possible.
So, after a sluggish post-pandemic performance, is London’s Zone 1 ready to rise again?
Wapping is the only “City Fringe” area with uninterrupted views of the Thames, so will always remain popular. London Dock’s latest phase, Merino Wharf, combines this vantage point with outstanding walk to work convenience. Goodman’s Fields in Aldgate is also in high demand, being located near the Elizabeth Line. Both developments place high on the wish list of corporate professionals and other big-hitting financial executives.
When dealing with the complex demands of tenants in Canary Wharf and the City, it certainly helps to have a network of international offices. We have been getting a steady supply of stock from our overseas teams with a high percentage of recent instructions coming from Chinese clients via our Shanghai office. Just over the river in Surrey Quays near Canada Water, our on-site branch in Marine Wharf is seeing rent rises of 25% on pre-covid levels. Constrained by lack of options elsewhere, tenants are having to renew at the full market rental. Supply issues are particularly tight in central London. The resultant rent increases will cushion the shock of interest rates for mortgaged landlords, but the impact of rent increases on tenants should not be discounted.
Our Shoreditch-based Japan Desk caters for Japanese corporates all over London and has had a phenomenal start to the year with 33% more tenancies compared with Jan 2022. The corporate transfer window will reopen in the spring, so we are keen to hear from landlords who have a property becoming available soon to help with our growing list of enquiries.
Proposed gov.uk whitepaper on rental reform
The media has recently run articles on ‘proposed’ legislation aimed at expending tenants’ rights. Many in the industry view this “Renters Reform Bill” as an unnecessary hindrance as the simplification and standardisation of tenancy agreements is already in place. There are also suggestions that new rental properties will require an EPC of C or better by 2025 followed by all tenancies from 2028. The government’s desire to take a tough stance may not outlive the current housing minister’s tenure. Judging by recent events, that might not be too long. We will of course keep our clients updated.
Maximise your property with minimal effort
As always, wherever and whenever you let property this year, we would advise you enhance your investment by making good use of any outside space. What tips the balance for many applicants is the provision of table and chairs on the balcony or terrace. What may seem to be a small detail might end up giving your property just the extra little bit of star quality it needs.
If you have a property to let or would like a free market appraisal, we cover all of London. Contact our friendly Hong Kong team for a no obligation conversation about what rental we can achieve.
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.