Over the last two years agent Strutt & Parker has seen a sharp increase in buy to let investors in the UK’s capital city with 26.2% of buyers in Chelsea purchasing a property for investment in the first quarter of this year compared to just 2.3% in the second quarter of 2012.
According to Zoe Rose, head of London lettings at Strutt & Parker, many buyers want capital growth so they are incorporating larger family accommodation into their portfolios, resulting in more family houses coming to the rental market.
‘With discerning, long term renters now the norm, more and more landlords are comprehensively refurbishing their properties in order to attract the best tenants and this is also having an impact on pricing and the type of property most in demand,’ she said.
Strutt & Parker’s tenants in London rent on average for 29.8 months, far longer than the national average of 20 months according to ARLA data. The majority of Strutt & Parker’s tenants in London are in their 20s and 30s.
‘We are finding that there is no longer such as obsession with home ownership amongst our younger tenants. The majority of our tenants are in their 20s and 30s and very used to renting. Singles or couples in their 20s tend to favour one and two bedroom flats, whilst married or cohabiting couples in their thirties, sometimes with one baby, usually prefer three or four bedroom mid-size houses or large lateral apartments,’ explained Rose.
The ultra high end sector of the ‘trophy’ prime central lettings market is also back. Strutt & Parker is currently marketing a 10,000 square foot penthouse in Knightsbridge and a nine bedroom newly refurbished property in Rose Square in Chelsea, both for £25,000 per week. Strutt & Parker’s office in Notting Hill in particular has gained significant market share in W11 for luxury properties to rent at £5,000 plus per week.
Rose pointed out that the market is increasingly fast-paced with the most coveted rental properties going to sealed bids and even being let without ‘physical’ viewings, mirroring the buoyant sales market in London.
‘We recently let a property on Coulson Street to a married couple from Geneva with a virtual viewing conducted via Skype. The property had only been on the market for a day but the prospective tenants were so keen to secure it long term it went for the asking price of £1,675 per week for three years with a market inflation increase factored in from the outset,’ Rose revealed.
Some 70% of Strutt & Parker’s landlord base is British, whereas 75% of its tenants are international often from France, Italy and Spain and this is driving some interesting changes in the marketplace.
‘Renting is the norm in prime European cities like Paris, Milan and Barcelona and the influx of young and affluent international tenants flowing into London is driving up standards in the capital as their expectations of rental property are very high. We describe this tribe as the GloMads, Global Nomads who are open to travelling from place to place over longer periods of time, often for employment,’ added Rose.
