Landlords’ fortunes have finally changed. Gone and long forgotten are the days of rental discounts, months long voids and enticing tenants with freebies. It’s a landlord’s market once again in London and not even extreme temperatures have put a stop to the agreement of a record number of rental deals. The sweltering heat might have halted London’s rail and transport systems, but the number of tenancies processed was 22% up on the same time last year, according to Goodlord, a letting technology provider.
We are still in the run up to the busiest rental period of the year – August and September are traditionally the time to let your property quickly and for a higher rent – and the rents keep on rising. Central London rents are now 14% higher than the 2017-2019 average and 28% higher than in June last year. I remember agreeing a rental deal for a client in late June 2021 – we agreed to pay £490 per week for a 1 bed flat in one of the new blocks in Battersea. This year, a 1 bed flat in the same building goes for £650 per week as an absolute minimum.
In short, the law of supply and demand (rental demand is up / property supply is down) is causing rents to spiral upwards. The international crowd is back in London and they look to start their tenancies after the summer holidays – around 10% of all new tenants in London right now are reportedly from overseas. Families tend to relocate during the summer and want to secure a place by September at the latest ready for the start of the next school year. In the UK, many of those who relocated to the country during the pandemic are now looking to rent a smaller property closer to their London offices. Agent Foxtons report that 46% of their lets in London are studios and one-bedroom flats.
On the supply side, 22% of private landlords have either sold or are selling their rental portfolios to capitalise on rising house prices and to cut their costs. The number of rental homes put under offer or newly let is 50% lower than pre-pandemic. Meanwhile, renewals are on the rise with tenants choosing to stay put and extend their rental agreements at higher rents and for longer periods. The lack of homes available to rent in London is forcing tenants to plan their move months ahead and adjust their price expectations. Our agency saw several prospective tenants register their interest six months before their potential move-in date.
Summer might be a popular time to take a vacation but there is no rest in sight for the letting agents! The temperatures are rising and so are the rental values. Let’s make hay whilst the sun is shining.