Interesting new research has revealed that tenants in Prime Central London are starting favour location and convenience over size, due to narrowing budgets.
Data from a report by London Central Portfolio suggests that there is increasing demand for smaller properties, dubbed micro-apartments. These dwellings offer a more affordable option for renters who wish to be closely situated near to their place of employment or study.
Fragmentation
Similar to the prime London sales market, where properties have been impacted on by changing tax alterations and Brexit uncertainty, now the prime London rental market is fragmenting by size and price.
During the last year, 42% of properties let have been either studios or a one- bedroom accommodation. This shows that tenants are prioritising lifestyle and transport links over square footage of their property.
This said, demand has been significantly slower for larger rental properties, with families now considering less central options, offering better value and increased space.
As Naomi Heaton, Chief Executive of London Central Portfolio observes: ‘Tenants are now looking for more affordable options, choosing central locations and an easy commute to work or university. This is reinforcing the new trend for the globally mobile to seek highly specified micro-apartments, with well optimised space, whilst families tend to opt for more suburban locations where smaller budgets can stretch to larger homes and ideally the possibility of outside space. Indeed, significant discounts to asking rent of over 10 per cent for the most expensive, luxury rentals are now being reported.’[1]
Prime Central London tenants favouring affordability over size
Market Listings
In addition, it is taking much less time to source tenants for these micro-apartments.
During the last year, the average marketing times for two-bedroom properties has jumped 85 days, increasing to 98 days for three-bedroom and 119 days for three-bedroom plus dwellings.
This is 42% greater on average than the time taken to let a one-bedroom studio, which are seeing heightened demand from single tenants and couples. In fact, 63.9% of London Central Portfolio’s current tenants are single dwellers.
What’s more, another indication of the trend in prime London towards micro-apartments is the number of properties being rented by price band.
More than one-third of properties let have rents under £500 per week, with only 3.2% of units rented for more than £2,000 per week. 70% of units being let are presently commanding rents of under £750 per week.
[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/7/prime-london-tenants-seek-smaller-rental-units-with-better-amenities