Out of the Frying Pan and into the Fire – Navigating Turbulent Markets
By Charlie Woods, Head of Lettings at Russell Simpson
With over 50 years of combined experience, Russell Simpson’s lettings team, headed up by market stalwart Charlie Woods, has operated in and navigated multiple market conditions. However, none have been quite as turbulent as the past three years, with the COVID pandemic bringing the country to a temporary standstill and altering the fabric of the property market irrevocably.
Charlie Woods discusses Russell Simpson’s approach to recent events, how the business came together to deliver the best results for clients and his view on the new direction of the prime London lettings market.
How did the COVID pandemic impact the prime London lettings market and what was Russell Simpson’s response?
There’s never a dull moment in the lettings market, but the pandemic added a new level of circumstances for us to consider and overcome. The implications of COVID-19 impacted all tiers of the market, with our landlords and tenants having the same worries during this period as anyone else, which meant we were flat out ensuring people could pay their rent and landlords could continue to maintain their properties.
There was a major shift in tenant’s needs and requirements from the properties they were searching for, whilst we also saw an influx of new landlords who saw the lettings market as a safer bet than sales during that period. This is where our experience came to the fore and we were able to offer the best advice, especially to clients coming across from our sales department and needed support and guidance on what to do with their home.
I believe we further increased our reputation with our long-standing clients, as well as new ones, by how we were able to support them and achieve the best results in such a volatile and uncertain period.
How did you help your clients navigate through this period?
One of the major USP’s of our team is that we are all at the frontline and operate across all aspects of the job, so we know the lettings market inside out. This is vital to allowing us to advise our clients. During the pandemic we worked with a lot of vendors that had initially been looking to sell through our sales division. We closely monitored the market and provided the best guidance we could to allow their home to generate income, whilst they waited for the market conditions to improve and we’re now at the stage where we’re handing a lot of stock back over to relist for sale.
Interestingly, we have also seen some sellers change tact completely and now they are full-time landlords. One example of a home that the vendor initially intended to sell is a large family house in Chelsea. We were instructed to source a tenant to allow an income to be generated until the sales market stabilised, however, due to a strong yield achieved, the owner allowed the home to be re-let when the tenancy was up, rather than put the home back onto the sales market and is now happy to continue doing so, whilst it brings in a good income.
Now we’re seemingly on the other side and in calmer waters, how is the prime London lettings market currently performing?
We have seen an imbalance in supply and demand since the turn of the year, with a lot of the stock that was available or coming up for renewal transitioning back over to the sales market, whilst anything that has become available has been snapped up almost immediately. Previously an almost exclusive trend in sales, ‘Off-market’ rentals are becoming more of a thing, as prospective tenant lists grow and we see a clamour for new properties that hit the market, that often sparks a bidding war.
We are all about relationships and contacts at Russell Simpson and the long term goal of our clients, that we are often able to secure new tenants for certain home types before they even come onto the market.
So, whilst the market is performing well and has been able to navigate the pandemic successfully, the lack of available stock has created a slowdown in some quarters, however, this is when the service element of our offering really comes into its own. Our existing and potential clients see that we not only deliver good results in a short period of time, but we also provide honest advice that will produce the best results for them in the long term.
I do believe things are coming full circle and as new rental stock becomes available the demand is there to see activity soar to greater levels.
You say things are coming full circle, so do you anticipate strong growth in lettings values in the next 12 months?
Despite the recent turmoil, rental values have reached new highs in 2022, with values increasing by 4.4% in Q1, however, growth rates since 2020 are lower than pre-pandemic levels, at just 7.8% across prime central London, which represents an average annual growth rate of 3.8% per annum.
Despite this, we expect growth to remain high throughout the year, with the drop in available stock, coupled with strong demand, set to have provide further upward pressure on values.
The Russell Simpson lettings department is celebrating its 30th year, what are your ambitions for the future?
Our ultimate objective remains the same and that is to continue to provide a tailored service for each client to ensure their home is always performing to its maximum potential. Whilst lettings have been operating for 30 years, the wider business has been established in Kensington & Chelsea for close to half a century, so we want to continue building on this experience and grow our reach across prime central London. We feel that the PCL market is easily transferable, with a diverse domestic and international market, so our skills are easily transferable, and I believe we can produce the same excellent results in all of the prime districts.