Why now is the time to list your property for the prime London rental market.
- Demand for prime London rental properties is high and stock is low
- Rent prices are rising, but the threat of a recession may see the market level out
- Average discounts on rental properties fell to near zero in Winter 2022
The pandemic had a significant impact on the prime London lettings market. With people leaving the city to move abroad or to the countryside, and ‘work from home’ removing the need for a city base, there was a reduction in activity, and an influx of rental properties on the market.
Today, it’s a different story. There’s now a lack of property stock. The decline is possibly due to, a trend towards long-term tenancies, and landlords selling their rental investments. This severe shortfall of available properties is the catalyst for the average rent in London reaching record highs1.
It’s time to look at where the prime London rental market stands today, and why now is an ideal time for landlords to list properties and make further investments.
Rising rents without discounts
In the fourth quarter of 2022, we saw how strong the prime London lettings market was for landlords. Not only were rent prices rising to record highs, but the average discount to average rents fell to near zero – with just one in ten recording a discount. Some tenants offered more than the asking rent to secure the property in a market where property was scarce.
Landlords with property investments in the prime London market were receiving asking prices, or above, and having their pick of tenants as people were driven back to the city for work and education.
Decrease in new instructions, increase in activity
At the start of 2023, we saw a rise in property stock. However, we can see signs of this tightening again in March, with 20% fewer London properties available than in February 2023. New instructions are down across the prime London lettings market, but activity is increasing as tenants start their property search.
Each year, from March through to November, we see an annual increase in applicant registrations for rentals in the area. International corporate relocations start taking place before the new financial year, and families look to move during Easter and Summer holidays.
This increase in activity has led to 20% more applicants. However, with 20% fewer properties on the market, rental demand in London outweighs supply. While this could mean further rent increases, LonRes reports that the threat of recession and job losses in the City and other sectors could lead to a levelling out of the prime London lettings market2.
Matt Staton, Head of Lettings, at Berkshire Hathaway HomeServices London, shares a preview of what is expected in the prime Central London lettings market ahead of the second quarter of 2023.
Reduced void periods
In the current climate, rentals aren’t spending long on the market. In winter 2022/2023 LonRes data found that the average time on the market hit record low levels. Reduced void periods are a desirable factor for any investment landlord3.
Call for more landlords
The post-pandemic prime London lettings market has done a complete 360, moving from low activity levels and high stock to high activity and low stock. Rent prices are rising and the few properties continue to support market growth into Q2 of 2023, and beyond.
The buoyant tenant market creates a strategic opportunity to list rental properties in prime London. Landlords can fetch higher rental yields, have a wider pool of tenants, and reduce void periods. If you have a property investment or are looking for one, now is the time to list it.
As Central London estate agents, BHHS London have tenants ready and waiting to hear about suitable properties in Central London. If you are a landlord with a property to let, we believe the economic outlook is favourable for listings in prime markets.
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