Supply of rental properties in prime central London has increased 12% since this time last year
Landlords are becoming more flexible with their rents in order to secure tenants
Tenant demand has softened due to reduction in corporate relocation budgets, financial services redundancies and increased mortgage availability
Buy to let continues to grow and now accounts for 13% of all UK mortgages
The balance of power has shifted from landlords to tenants as the supply of available properties in prime central London has increased, according to Chesterton Humberts' latest Prime London Lettings Report.
According to the report, supply levels have increased by 12% over the past year, causing greater competition between landlords, many of whom are responding by offering to freeze rents for tenants and sometimes even reduce them altogether. This has resulted in improved affordability for tenants and driven agreed lettings deals up by 5% over the past three months.
The increased levels of stock has been largely fuelled by the growing buy-to-let market; reduced corporation relocation packages; redundancies especially in the financial services sector and the greater availability of cheap mortgages which is encouraging those in rental accommodation to buy.
The buy-to-let market continues to attract investor interest with 13% of all mortgages in the UK now representing buy-to-let landlords. This strong growth is largely a result of disappointing stock market performance which has driven investors towards the long-term growth and low volatility of residential property in London when compared to other asset classes.
This is a trend that Chesterton Humberts expects to continue during 2013.
Nick Barnes, Head of Research at Chesterton Humberts, comments:
"The prime residential lettings market remains active, however with buy-to-let landlords bringing more stock onto the market, tenants now have a wider choice and consequently greater bargaining power. This is forcing landlords to be more flexible in order to attract and retain tenants, which is often resulting in downwards pressure on rents."
