With oversupply still characterising the market and landlords suffering from unprecedented taxation levels, London’s rental market is likely to see another unsettled year.
Benham & Reeves Residential Lettings has encouraged its landlords to avoid rent rises and instead, to focus on retaining tenants over the long term. Despite the furrowed brows of many letting agents, however, the latest research from Benham & Reeves Residential Lettings shows that many areas of London are seeing an upturn in the market that may be the start of a rebound.
Consistent with other market predictions, Benham & Reeves Lettings saw the largest rental growth outside of central London. Suburban locations underpinned by a strong local market and improving transport links saw the biggest rent rises. Of particular note is Colindale in far north London which saw rental rises of 4.7 per cent.
Even parts of prime central London which have suffered the most in recent quarters seem to have turned a corner. Several prime central London postcodes saw average rental values increase by four per cent or more, although new developments in these areas were often behind the price growth. In W1, for instance, the new Fitzroy Place just north of Oxford Street in central London helped push rental price growth in the £700-£1200 per week bracket. This same effect is widely anticipated in Wapping once units in the eagerly awaited London Dock development begin to hit the market at the end of January.
Even landlords in areas such as Hampstead and Knightsbridge that saw another quarter of stagnant rental price growth have reason to celebrate. Lease renewals are up with Knightsbridge reporting an extraordinary 85 per cent renewal rate. The average length of a tenancy in 2016 was 17 months. In years past, the average was less than a year. So while landlords are not able to achieve higher rents, their overall income is higher thanks to fewer and shorter void periods.
“There is no doubt that landlords have had a tough time of late,” comments Marc von Grundherr, Lettings Director of Benham & Reeves Residential Lettings, “Rising taxes and stamp duty rates have taken their toll and it’s been hard to offer many crumbs of comfort to our landlords. These latest figures, however, demonstrate that for those who are able to ride out the tough times, the market will eventually turn back in their favour. We don’t want to be too optimistic just yet as things are still undeniably difficult for many amateur property investors but nothing could be as bad as 2016. Roll on 2017.”
Meanwhile, the boss of a property consultancy has advised investors to ignore scaremongering and that the London property market is still a good bet for international investors.
Eyeedul Haque, of My Property Consultant Ltd., (MPC), which specialises in London buy-to-let investment, says that although Brexit is causing uncertainty, there are strong reasons to look to the London real estate market.
“The issue of Brexit is, unsurprisingly, making would-be property investors very nervous. The level of uncertainty is breeding fear, but fear can be an investor’s friend. As Warren Buffett once said, “be fearful when others are greedy, and greedy when others are fearful, an ethos that has served me well over the years”.
