UK Property - London Residential Letting Review Q3 2019
PRIME LONDON LETTING MARKET INSIGHT
An increase in supply and demand looks likely to keep rental values in check during 2019, as Tom Bill explains.
Demand in the prime London lettings market strengthened notably over the first six months of the year.
The number of new prospective tenants registering in the second quarter of 2019 rose by 47% compared to the same period last year. It was the highest such year-on-year increase in more than ten years. Over the first half of the year, the increase was 34%, as figure 3 shows.
The reasons for the increase include the unpredictable political backdrop, which means some buyers have opted to rent in the short-term.
The other factor that explains the rise is the tenant fee ban, which was introduced in June and reduces upfront costs for tenants.
Viewings in the first six months of the year rose by 10% compared to last year, while the number of tenancies agreed was up by a quarter.
Despite this growing demand, rental values in prime central London have been flat over the last year. Average rental values declined 0.5% in the year to June, which followed 12 months of annual rises that peaked at 1.4% in February. There was a similarly stable picture in prime outer London, where annual rental value growth was broadly flat in the first half of 2019.
The reason rental value growth has been kept in check is rising supply of homes to let, particularly in higher value price brackets.
While the overall number of new listings in PCL and POL was down 5% and 8% respectively in the year to June, in prime central London the number of newly-listed properties with an asking rent above £1,000 per week rose 11%. The increase was 16% above £2,000 per week.
While some landlords initially listed their property for sale in response to tax changes, a number have returned to the lettings market after failing to achieve the asking price, a trend that is more marked in higher price brackets because vendors are typically more discretionary.
This trend has also been observed in the super-prime (£5,000-plus/week) price bracket. Along with political uncertainty, this increase in availability has driven the number of tenancies to 151 over in the year to June 2019, the highest figure for a 12-month period in more than six years.
Courtesy: Knight Frank
CONTACT FOR FURTHER INFORMATION:
Tom Bill - Head of London Residential Research
+44 20 7861 1492
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