The residential lettings market in London is fairly neutral with many postcodes showing little or no rental increases, with some showing rental decreases, according to the latest analysis.
While there is an increase tenants, rents haven’t seen increases in locations such as Zone 2 and 3 because of the amount of choice people have, says the report from lettings firm Benham & Reeves.
The firm says that, with this in mind, it is necessary for landlords to take a closer look at the market to work out how best to protect their property investment.
Areas such as Acton, Ealing, Wapping, Shadwell, Earl’s Court, and Kensington and Chelsea are showing reasonable rental increases of 2% and they are continuing to attract tenants looking for high quality rental accommodation, the report suggests.
It explains that Acton and Ealing are great examples of the Crossrail effect, the impact of where investors have purchased property for rent offering a great choice for tenants. When it opens in December 2019, it is expected to make the area even more desirable to tenants, with good value rents and easy access to east and west areas of London with far shorter travel times.
Meanwhile, Wapping and Shadwell are regarded as desirable due to being near Canary Wharf where many large, international companies are based. Moreover, the areas themselves have gone through huge redevelopment in the last 10 to 15 years and now offer riverside living at its best, the report also points out.
Across the majority of postcodes there is an even spread of between rent rises of 2% and rent falls of 2% and the report suggests that this neutrality is to be expected with so many new schemes rolling out at the same time.
‘Tenants are looking for value for money especially as corporate budgets haven’t increased and they know that in a tenants’ market, they can drive a hard bargain. Many landlords are taking the business decision to renew contracts with existing tenants with no rental increases in order to keep good tenants and avoid any possible void periods,’ the report says.
It also points out that there is a difference in demand according to location. For example, in Nine Elms there was a 12% increase in May for one bedroom apartments and in Colindale the number of tenants looking for smaller properties increased with demand from City professionals and students.
There are some areas that are experiencing surprising rental decreases. Areas such as: Golders Green, Hampstead, Barnet, Marylebone, Westminster, South Kensington, Knightsbridge, Hammersmith and Fulham, Barnes, Richmond upon Thames, South Lambeth, Vauxhall, Battersea, Clapham and Stockwell all recording drops, but lower than 4%.
‘The drops are all in desirable areas that continue to be very popular. What we are seeing is more stock coming to the market thanks to large developments and that is giving tenants more choice on places to rent and more power to negotiate lower rents,’ said lettings director Marc Von Grundherr.
He added that the advice to landlords in these areas and across London is to ensure the property is maintained and presented well. ‘Keep it decorated and furnished in line with interior trends and to a high standard, and to make sure it is offered for a reasonable rent. If tenants have greater choice, it is important to make your property one they won’t want to miss,’ he added.
