New data reveals that private landlords in London are beginning to feel the impact of reduced tenant demand, with many being forced to cut rents to attract new tenants.
With more properties to select from, tenants are in control of the private rental market in the capital, according to the most recent analysis from HomeLet.
What’s more, the capital’s new build housing market has been particularly impacted by the slowdown in the rental market, according to London Central Portfolio’s (LCP).
Period Homes
A recent report from LCP showed that sales in London have fallen by as much as 41%, with the company suggesting that many new build properties are being left vacant as more renters are targeting period homes.
With a number of regions seeing falls in demand, LCP believes that places with vast numbers of planned new homes are, ‘really beginning to suffer.’
One of these regions is between Battersea and Nine Elms. Typically, foreign buyers look to purchase in this region as rental investments. There has been an increase in stock of 28.1% during the course of the last year. What’s more, there has been a reduction in asking rents of 6% during the last quarter.
Despite this, the number of properties actually let has fallen by 14.8% during the same period, alongside a fall of 2.8% in achieved rents.
Is the lettings market in London favouring tenants?
Fragmentation
Naomi Heaten, CEO of LCP, observed: ‘In much the same way as we see in the sales market, there is increasing fragmentation in the lettings market, according to property type (new build or traditional stock) and by price point.’[1]
‘Alongside the oversupply of rental stock in new build heartlands, the uncertain economic outlook has resulted in tighter tenant budgets. It is therefore not surprising that recent reports indicate a 14.8% fall in the number of properties rented south of the river over the last three months and a 6% discount on asking rents,’ she continued.[1]
The research also found that the rental market in London was far stronger in areas with more limited new build potential.
In prime central London, where stock levels has risen by only 5%, rents have not been negatively impacted. In addition, they have seen an increase of 1.5% in the last three months. The number of properties being let out has also risen by 2.5% in the same period.
Heaton went on to note: ‘In contrast to the dynamics south of the river, the mainstream rental market in prime central London has continued to perform positively as demand for well-presented rental property remains high and stock remains scarce.’[1]
[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/its-a-tenants-market-in-london