Prime property rental market improves in UK Home Counties
Prime property rents in the popular Home Counties within commuting distance of Loddon increased by 0.5% in the third quarter of 2016, according to the latest index data.
But the region is seeing the emergence of a two tier market as there has been a sharp increase in the number of properties at the very top end renting for £15,000 a month or more, leading to rent falls.
The data from real estate firm Knight Frank also shows that overall rents in the prime market are also up 0.5% year on year and there has been a pick-up in rental growth which has reversed the trend seen in recent quarters, despite some of the wider economic uncertainty surrounding the Brexit vote.
However, these headline figures do mask variations within the market. Activity has been more robust in lower price brackets, something which is reflected by stronger rental growth for smaller properties.
Above this level, for larger properties, rising stock volumes have kept a lid on growth. The number of new super prime rental properties with an asking rent above £15,000 per month placed on the market across the Home Counties in the three months to September 2016 increased by 81% versus 2015.
Indeed a breakdown of the figures show that homes with fewer bedrooms have seen rents rise while those with four bedrooms or more have seen them fall. One bedroom properties have seen rents rise by 7.9% in the year to September 2016, two bedrooms by 4.8% and three bedrooms by 1.6%. But properties with four bedrooms have seen rents fall by 2.2% and those with five by 9.5%.
‘Supply at the top end has been boosted by an increase in the number of vendors deciding to rent out their property due to weaker conditions in the prime sales markets. As a result, at this level of the market the balance of power remains tipped in favour of tenants,’ said Knight Frank associate Oliver Knight.
‘In some cases, landlords have had to be flexible in terms of negotiations around rents in order to minimise void periods. This has contributed to an increase in the number of super prime tenancies being agreed so far this year compared with 2015,’ he added.
The report points out that demand has also grown among try before you buy tenants opting to rent before purchase and this may be due to increased levels of stamp duty in the sales market.
The number of new prospective tenants increased by 22% in the third quarter compared with the previous year and there was a 13% increase in viewings. ‘As a result, there is an expectation that rental volumes will rise in the coming autumn and winter months,’ said Knight.