Rent for three bed homes in London rising due to lack of supply
Rents for three bedroom properties in London continue to grow while one and two bedroom homes are getting cheaper, according to new research.
Demand means that tenants are willing to pay over the odds for a three bedroom property but there are far more smaller homes available, according to the analysis of figures from the National Rent Review from buy to let mortgage lender Landbay.
The research also shows that the uplift in rent between one and two bed properties across the UK, excluding London, is 19%, and only 15% when rising from a two bed to a three bed. However, in London rents jump by twice the national average from £1,455 for a one bed to £1,926 for a two bed and three times the national average to £2,690 for a three bed.
The report suggests that these huge jumps show London has a far greater available supply of one bed, and particularly two bed, properties, than for larger homes. Tenants that have more two bed properties to choose from will be willing to pay less in rent, which goes some way to explain why properties of this size have seen the greatest decline in rents.
Three bed properties are the only property size in London where rents have ended the year without notable falls, remaining flat year on year by the end of 2016, at an average rent of £2,690.
For tenants, the question of living in a two or three bedroom property has become more significant, especially given people are now renting three years longer than in 1995, so are more likely to have growing families before they have secured their first home.
According to John Goodall, chief executive officer of Landbay, with house prices rising further out of reach of aspiring home owners demand for family size homes is set to continue rising. ‘In London, where space is already at a premium, a relatively well served two bed rental market means those looking for more space now pay dearly for that extra bedroom,’ he said.
He also pointed out that while the Government’s recent £7 billion commitment to build 200,000 starter homes including homes for the private rental sector this may not necessarily meet the growing demand for larger rental properties, both in the capital and across the country.
While for landlords there is the opportunity of offering a three bed property in a London market crowded with smaller properties with the benefit being a 40% uplift in rent received for a house that is likely to have no more than 30% more living space.