Published: 24/05/2022For the last 6 months the prime Central London residential rental market has been experiencing unprecedented demand with the queue of prospective tenants far outstripping available properties. Indeed, Maggie, Head of Lettings at Prime Portfolio says that “1 and 2 bedroom flats are going like hotcakes”. She references as an example a studio flat in South Kensington that the company recently advertised for rent which caused a frenzy of interest as soon as it went live and resulted in 27 back to back viewings every 2 to 3 minutes, 3 offers and the flat renting for well over the asking price. “Our properties are good quality so they always let quickly but this level of interest is crazy.”
Whilst Prime Portfolio choose to advertise their properties on the open market, stories of properties renting at up to 20% over the expected rental level off market are rife. In some cases, if you haven’t got a search agent looking for you, you just don’t get a look in and even if you do, best bids is not uncommon. Tenants have tried offering sweetners to secure themselves as the winning bid. These include paying one or two years up front and agreeing rental uplifts in advance. Another Prime Portfolio let saw a prospective tenant offered £100 over the asking price p/w, 3 years before a break clause with 1 years rent upfront and to wrap up and store the furniture they didn’t want to use for nearly £300 per month!
Its interesting to note that according to a leading London Agent, at the end of Q1 2022 the average prime Central London rent had risen by 15% over the last year, quite a different picture from the year before when rents were down 10%. So what’s fuelling this buoyant rental market? According to John Vaughan at Prime Portfolio there is a log jam where people are staying where they are, often on old deals at low rents and there is not much choice for new arrivals. International renters are returning to London and this is driving, and expected to continue driving prices. In addition, the tourist short term rental market hasn’t kicked back in yet. One bedroom flats are in particularly high demand as the post covid world embraces a hybrid of working from home and the office. “There’s no struggle at all to let desirable homes at the moment.”
Stock levels are also short because, existing tenants are choosing to stay put and accept increased rents on renewal for fear that they might not even be able to secure another let. A year ago, tenants were negotiating rent reductions to stay!
So landlords of buy to let properties in good Central London locations are making hay while the sun shines and some agents are predicting a 6% rise in prime Central London rents in 2022. It will be interesting to see how and when the supply demand imbalance starts to correct itself.
We also have the next influx of overseas students coming over in the summer – last year that caught everybody out and we wonder if it will compound the shortage even more. Agents should be advising their Clients to be ready....