State of the London market for rental properties?(24 Posts)
I would appreciate some advise on the current and projected condition of the London property rental market.
We moved overseas a few years ago (hopefully temporarily), and our little London flat will be on the rental market soon as the tenant has given notice. What can we expect?
From a distance, it seems there are a glut of rental properties available atm - maybe a result of investors piling into the buy-to-let market ahead of Brexit and the stamp duty change.
If London house prices are set to drop significantly, how is that likely to affect the London rental market?
Any advice much appreciated.
The only slow down has been in the superprime segment but the market in more affordable areas can be pretty insane and prices are climbing. Rental-wise, you should have a log queue of potential tenants as the number of people in London is increasing rapidly but the supply of housing can't keep up.
My observations are that there are a glut of one/two-bedroom flats in London and condition and price are crucial to get good quality tenants.
Just don't be greedy about the rent.
If you look on Zoopla for rentals, there is a 'most reduced' search facility, and in the postcode I often check, since I have a rental in the area, there are plenty. Some will have been empty for quite a while.
Personally I would do my own eagle eyed research over rents in the area before fixing a price, and bear in mind that the rent asked for is not necessarily that which is finally achieved. Also, letting agents, if you will be using one, do often tend to quote something 'optimistic' since they want the business.
A competitive rent is IMO a lot better than having a place empty for a few months.
Sorry to be slow in responding.
The flat is in Zone 1, so well situated. It has had an entirely new kitchen / appliances, freshly decorated and new carpet - so is in pristine condition. It is in a lovely building, and is on the top floor so is secure and has good light. And there is a lift, for anyone who doesn't like the idea of lots of stairs
The timing may be less than ideal though, as the estate agent says that there is a glut of property on the market atm (lots of choice, and less urgency to commit than in the past), and a big reduction in tenant enquiries overall - probably down to political uncertainty / Brexit and the economy.
Most flats that are being let out atm in the area seem to be
- very price sensitive, skewed toward the low end
- suitable for sharers
I can look on Zoopla, PrimeLocation or Rightmove and see that many properties have been on the market for quite a while (sometimes months) and prices have been reduced on many.
Are people simply staying in their current properties, or do you think they are moving further out to get more for their money - even though commuter costs will likely eat up the savings of cheaper rents?
It seems that it could be a tricky time to be a landlord, but the timing can't be helped. Any insight as to the current market / tenant's mentality would be appreciated.
Is your property in a prime location and expensive? I can't see that something lovely, in a pristine condition wouldn't rent, especially on for a reasonable price. Is it close to public transport and amenities? Is the block nice, view ok (not over a factory or train tracks etc), is the road reasonably quiet? You also mentioned not sharing - do you not want sharers - that will limit your tenant pool massively. Have you had many viewings? Any feedback?
A few random observations about the current rental market in central London:
- There seem to be fewer people looking for property. It seems many renters are simply renewing existing contracts, rather than looking to move. What is the reason for that?
- glut of property on the market atm gives tenants more choice, ability to be more picky, and less urgency to commit. Tenants also appear more inclined to make cheeky offers.
- properties seem to be on the market significantly longer because of the glut
- rents appear to have flatlined, and in some cases it appears rents are falling as properties sit on the market.
Are rents falling because landlords have been too greedy, or is there a fundamental shift in the market due to oversupply and Brexit / economic uncertainty referenced earlier on the thread?
Any other thoughts?
I'd guess that as the property market softens, a lot of tenants would prefer to be on rolling contracts rather than a fixed term which is mandatory with a new tenancy, so that they can spring into action if prices get to a point at which they feel buying is a possibility. Dealing with estate agencies (and their many dubious fees and charges) is a pain in the neck and another reason to stay put. And the price that they pay in central London may look less attractive than it once did - it is eye-wateringly expensive to live in most of zone 1.
I'd repeat my point upthread that there are a glut of BTL properties in London and letting them is becoming harder. Yours will certainly stand out if it's in great condition and a great location.
There seem to be fewer people looking for property. It seems many renters are simply renewing existing contracts, rather than looking to move. What is the reason for that?
In a rising rental market - you get to the end of your 12/18/24 month contract and LL says "I'm putting the rent up to £x+y" and you think "fuck that, I can only afford £x" so you have to look for somewhere else to live.
When the rental market softens, the LL doesn't put the rent up at the end of the fixed term so tenant and LL are both happy to go onto a tolling contact with no admin fees. Tenants don't generally want to look for somewhere else to live.
Also lots of redundancies and people looking abroad for jobs
lalalonglegs and Kiroro - those are interesting points, and a good explanation of why there isn't a lot of movement in the market atm. And yes, prices are very high in central London, but commuting costs / hassle /time can make it less appealing to live further out.
antimatter - that is surprising. I am not in the UK, but I was under the impression that unemployment was quite low, historically speaking - though, that certainly would change dramatically if the big international companies decide to move elsewhere because of Brexit.
It does feel as if there is a shift in the market. Demand seems lower, inventory seems higher, and it appears that prices are coming down. How far down and how fast are the big questions.
I am in a similar position to you. When we were marketing our house last year we had a couple of offers which were then withdrawn. The agent told me that when tenants were giving notice at the end of their contracts the existing landlords were offering to reduce rents if they renewed, which was making people stay put because they didn't have the hassle of moving and it was cheaper to stay where they were.
JoJOSM2and lalalonglegs - the property is in a prime location, and on the higher end in terms of price/location/building.
The block is lovely (on a garden square), though one street away from a main road. Common parts were completely refurbished 2 years ago, so are fresh and appealing. The block is equidistant to two tube stations (5-10 min walk either way). There is a wide selection of shopping, supermarkets and restaurants less than 5 minutes walk away.
I am not fundamentally opposed to sharers, but it seems that most in our area are looking for 3 bedrooms, and ours is a 2 bed. We have not had any viewings with sharers, but have had a fair number overall (even a handful of second viewings), but no offers to date. Typically people simply disappear, so we can only assume they've found something else.
The estate agent is at a loss as to why the flat has not rented. There is no obvious reason. They keep repeating that there are something like 30% fewer people out looking for central London rental properties atm, though locations like Weybridge seem not to have slowed.
I am not opposed to decreasing the price, but am trying to understand if the issue is my flat, the job done by the estate agents, or the market overall. n Or, a combination of all of the above.
Drop the price, give someone an offer they can't refuse because it will cost money to leave it empty. It is worth noting that property prices in prime central London have dropped 10-15% officially in the past 12 months, but I'm hearing much more than that anecdotally (this is for sale, not rental, but one would expect some sort of corresponding reduction in that market too).
Estate agents are always at a loss to explain why something isn't shifting, in my experience - it's never that they prefer not to disappoint their clients by telling them they need to drop the price/redecorate/give the place a good clean etc (not saying that any of these factors apply to your flat, it's just estate agents are useless at passing on bad news).
Do you know that the flat is actually in pristine condition if their is a tenant already in there?
When will the flat be available from - no point marketing it too early of it s not free for a couple of months.
If this (below) is what the research you have done is showing then you need to get down to that level to compete otherwise you will be empty as other properties will come on the market and under cut you as well.
"Most flats that are being let out atm in the area seem to be
- very price sensitive, skewed toward the low end
- suitable for sharers"
Reasonable rent means that you keep a tenant longer term which saves all the cleaning, inventory, refresh and agency fees.
We let out a2 bed in zone 2 in one day and had to turn people down. A couple of months ago and others have had the same experience. Are you just priced too high? Sorry for typos. Pinned under baby
Binkybix - I am starting to think the flat is priced too high. It is what the estate agent recommended, but I think the price should be dropped by £25 per week or so. If you don't mind me asking - how much did your flat rent out for? Ours is definitely on the higher end, but pretty much in line with others in the area.
Maybe another issue: many buildings in zone 1 now seem to have all sorts of amenities - almost like a hotel. Our building, while lovely, does not have a big resident's gym, sauna, etc. Also, the flat is not a 'cookie cutter' box style layout. Perhaps the slight quirkiness and charm are not immediately evident to people looking for flats. Maybe people want cookie cutter box style flats!
ChipmunkSundays - can't post a link atm, as the flat is currently off market. Will be going back on in a week or two....probably with a price reduction.
another 20 - yes, flat is in pristine condition. After the tenant moved out, the flat was completely re-done. New kitchen, new appliances, new boiler, new carpet, completely redecorated. It is like a new flat.
The estate agent says there are 30% fewer enquiries as compared to this time last year. He says many people are simply renewing / staying put, and that there is a glut of properties on the market atm.
every week your flat is empty you are losing hundreds of £
that's why renting it for less makes sense (unless of course you don't mind losing those hundreds )
Look at the price ranges for Right Move searches and make sure you price just below the boundary to maximise views.
Prices, I also let in Zone 1, have got softer in the past year. Tenant quality is often as important as rent, especially if you find someone who will stick for a few years. Given no one is sure what will happen in the next year, I would price keenly and get it let.
Also you don't get much of a discount from sole agency so put it with more than one. I have seen a lot of sharkish behaviour, and find it helps having a second agent who can give advice iof the first is behaving badly. .
Just thought I'd come back to say that the flat has finally been rented, with a tenant due to move in in May. We did two price drops, and ended up negotiating a rent 12% below the initial number which had been recommended by the estate agent.
There were many viewings, but there is so much stock on the market that there is no urgency to commit, and people can be very picky. We were told people didn't like the stairs at the front of the building, didn't like the handles on the wardrobe (!), didn't like the main road nearby, the flat didn't have enough storage, someone wanted a building with a large / well-equipped gym (which ours doesn't have), etc. Most of these things probably wouldn't have been an issue in a 'hot' market, but things have cooled dramatically.
The large inventory currently available and the Brexit uncertainty make it a very tricky market atm. We also were told that many people are simply renewing leases in their current properties because of the expense of moving, and landlords making concessions to keep them from moving out (no rent increase, etc). Evidently the cheapest / smallest properties are moving off the market with relative ease, but the larger/ more expensive properties can sit unoccupied for months.
How have the rest of you got on with finding tenants? Or keeping tenants?
Welcome to the world outside London, by the sound of it!
And the world of 10 years ago in the south east.
Bye bye bubble. Glad to hear you have a tenant and thanks for update.
I've just managed to let a three bed in Zone 2 London. First void I've had in about 15 years, but haven't had to reduce the rent although four tenants instead of three.
I've been keeping an eye on Rightmove for the last month or two and have been amazed at the volume of stock on the market. Pricing seems all over the place. Mine was the cheapest within a 1/4 mile radius, but I wasn't overwhelmed with viewings.
My letting agents lost the original tenants that had been lined up after the last ones moved out. They've been useless at getting new ones and don't seem to have done more than a couple of viewings in the last few weeks. I found these new tenants through Openrent which will save me a good chunk of money as well as no fees for the tenants, which seems better all round.
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