Rents flatline in the capital

The latest research from Benham & Reeves Residential Lettings shows a neutral market; many postcodes are showing little or no rental increases, with some showing rental decreases.

Related topics:  Landlords
Warren Lewis
23rd July 2018
London 8

The market is buoyant with an increase in the number of tenants however, rents haven't seen increases in places like Zone 2 to 3 because of the amount of choice people have. 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 and Ealing in W3, Wapping and Shadwell in E1W and Earl's Court, Kensington and Chelsea in SW5 are showing reasonable rental increases of 2%. These areas, each with different qualities, from the Royal connections of Kensington & Chelsea, to the metropolitan, urban feel of London's Docklands, are continuing to attract tenants looking for high-quality rental accommodation.

Acton and Ealing are great examples of the 'Crossrail effect' i.e. the impact of where investors have purchased property for rent offering a great choice for tenants. Though it is not in operation yet, (due 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. Wapping and Shadwell are an easy hop to Canary Wharf where many large, international companies are based. Moreover, the areas themselves have gone through huge redevelopment in the last 10-15 years and now present riverside living at its best.

Across the majority of postcodes there is an even spread of between 0% and 2% rises, and between 0% and -2% drops. 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. We have certainly seen 17% of our landlords renewing their existing tenants with no rent increases for these reasons.

It is important to note that though the rental growth is slow, there is no drop-in demand. Our Nine Elms branch, for example, saw a 12% increase in May for one-bedroom apartments. Equally, our Colindale branch saw waiting lists swell for smaller properties with the demand from City professionals and students. So, the overall neutrality of rents this quarter is no real cause for concern.

There are some areas that are experiencing surprising rental decreases. Areas such as: Golders Green, Hampstead and Barnet in NW11, Marylebone and Westminster in W1H, South Kensington and Knightsbridge in SW7, Hammersmith and Fulham in W6, Barnes and Richmond upon Thames in SW13, South Lambeth, Vauxhall, Battersea, Clapham and Stockwell in SW8 are all witnessing rental drops of lower than -4%.

Marc Von Grundherr, Lettings Director,ggg comments: “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.”

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.

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