Landlords in London cherry pick tenants as competition in rental market grows fierce

 
With the number of applicants competing for each property on the increase, many landlords find themselves in a position where they can select the tenant with the most secure employment prospects or those who are likely to cause the least wear and tear to the property.
 
‘The days of simply providing ID and proof of income in order to secure the rental property of your choice are fast disappearing in central London. Competition is fierce for high quality rental properties and applicants are now discovering there is a pecking order in the queue. In some cases tenants are being required to pay eight weeks' rent as a deposit to allay the landlord's concerns over redundancy,’ said Lynn Hilton, partner for residential lettings at Cluttons.
 
‘We are also seeing a sharp increase in gazumping in the lettings market, as well as a rise in tenants making best and final offers, as they compete for properties. This can result in agreed rents in the region of 5 to 10% higher than the asking price. London’s landlords are enjoying the most favourable market they've seen in years,’ she added.
 
Next year is likely to be a buoyant one for the rental sector, according to many commentators. With the mortgage market remaining a closed shop to many would be first time buyers, the pressure on the private rented sector is only likely to increase. ‘This, coupled with the underlying demographics of increasing housing demand at a time when the supply of new homes is at an all time low, means that the current upward pressure on rents will continue well into 2011,’ said Neil Young, chief executive officer of private rented sector specialist the Young Group.
 
The latest figures from LSL show that nationally rents have increased by an average of 4.5% in the past 12 months to almost £700 per month, and in London and the South East, where the housing pressure is greatest rents are now 6.8% higher than a year ago and Findaproperty reports that average asking rents in London are now £1,818 per month.
 
The company’s central London office, covering property across transport zones 1 and 2 has witnessed a marked increase in competing offers for property and average void period is down to just two days across its hundreds of properties.
 
‘As rentals are increasing, both landlords and tenants need to take steps to ensure they do not run into difficulties with rental arrears. Tenants need to be realistic about their property expectations and not overstretch themselves; equally, landlords need to ensure that tenants' are being adequately referenced and credit checked in the first instance,’ said Young.
 
He also points out that with the Government’s changes to the LHA looming, there has been much talk of its impact on the private rented sector. ‘If the predicted rush of tenants from the social sector into the PRS does take place, and personally I don’t think that it will, it is likely to increase demand for property at the lower to mid range price points, which will have a knock on effect across the rental market with increasing pressure on rents. However, now that implementation of the proposed new measures has been delayed, the impact over the next 12 months will be much less significant than previously expected,’ he explained.