The number of homes in the Home Counties in the super prime lettings market properties put up for rent fell in 2017 as the sales market showed signs of picking up, the latest research shows.
A more active sales market in these sought after counties surrounding London has tempted more owners to rent rather than sell, according to the report from real estate firm Knight Frank.
It explains that the prime rental market in the Home Counties tends to be very cyclical, often picking up when the sales market slows and vice versa. This is especially the case in the super prime market, covering rentals of at least £15,000 per calendar month.
However, momentum swung in favour of the sales market in 2017, with Knight Frank figures showing a 13% increase in the number of transactions agreed above £5 million across the Home Counties compared with the previous year.
Agents noted that in comparison deals in the super prime lettings market were less frequent but they also indicated that to rent the homes must be in top order to attract top rents and those with empty properties may reduce the asking rent.
‘A more active sales market has tempted a number of accidental landlords and tenants, who had switched to the rental sector following changes to stamp duty, back into the sales market,’ said Jemma Scott, a partner in Knight Frank’s super prime Home Counties team.
‘This has meant that stock availability has been more limited this year, a factor which has ultimately contributed to a moderation in activity,’ she added.
Indeed, an analysis of listings data from Rightmove showed there was a 7.2% drop in the number of new super prime properties brought to the market across the Home Counties compared with 2016.
As a result, there is evidence that landlords have been willing to reduce rents in order to attract tenants and minimise void periods where properties sit empty. Some 30% of properties listed for rent above £15,000 per calendar month in the Home Counties saw a cut in asking rents last year.
This coincided with a 16% increase in the number of properties listed for rent between £10,000 and £15,000 per calendar month with some of these properties moving from the super prime bracket.
‘What isn’t immediately obvious is the large proportion of transactions that occur off market. As a consequence of reductions to asking rents, where tenants are also able to offer attractive terms in other areas, such as long-term commitments or larger advance rental payments, they are able to take advantage of some good deals,’ Scott explained.
‘However, landlords need to ensure their properties offer the highest specification and quality in order to the command top rents,’ she pointed out.
The report adds that the market in London has been more buoyant, with a record number of super prime lettings transactions in 2017, up by 35% year on year, according to LonRes data.
