Market analysis from prime central London estate agents, Russell Simpson, identified a shift in buyer habits that is fuelling a surge in the rental market. Additionally, properties that have been recently refurbished are now commanding significant premiums compared to equivalent unmodernised units.
2021 was a record year across the prime central London property market, as the impact of the pandemic receded and vendors reinstated their homes for sale, with many properties that were temporarily let taken off the rental market. However, despite demand outstripping supply, activity levels remain lower than expected, with the number of homes currently under offer and new tenancies agreed 50% below pre-pandemic results.
This is having an influence on tenancies, with tenants opting to renew existing agreements early or agreeing on longer-term tenancies for additional security. In some cases, landlords are looking for a three-year lease with no break clause.
Whilst the stock levels have remained low in Q1 and Q2 of 2022, the demand has increased. There are some clear trends in how long a property takes to rent with price, location and property type all being factors. Properties valued at £500 - £1,500 per week have rapidly fallen in time taken to let, whilst homes on the market for over £2,000 per week are also being secured quicker but at a slower rate.]
Charlie Woods, Head of Lettings at Russell Simpson, comments: “The lack of available homes on the prime rental market has had a marked impact on the values being achieved, with demand outstripping supply. However, we’re seeing a shift in demand from prospective tenants who are looking for modern homes that are spacious and where possible offer direct access to outside space. The demand is at its highest with recently modernised homes, as people are looking more from where they live, which in turn is allowing landlords to command even greater returns for a home that has been recently upgraded.”
Despite the recent instability, Autumn is traditionally a busy time for the rental market and with rental values increasing by 4.4% in Q1, this trend is expected to continue into Q4.
Charlie concludes: “Demand for letting properties will remain strong with stock levels continuing to increase towards the end of the year. In August we will see a further increase in demand due to students finishing school and university. As a result, this will positively impact rental values so landlords can be optimistic about the future.”
