London rental market update
Fri 18 May 2018
Corporate net migration to London continues, as does increased pressure for quality rental properties
Tenants are staying put for longer
It seems tenants are increasingly interested in staying in the same property for much longer than before and are therefore opting for lengthier tenancy contracts. Indeed, the average length of an agreed tenancy at Marsh & Parsons has increased to more than two years, compared to just 18 months back in 2015. This is due to several factors, including the sheer hassle and cost of moving home, finding a great rental property that’s within budget, saving longer to purchase a first home and, for international residents, the flexibility of long-term renting compared to buying a home.
Migration to London continues, as does increased pressure for quality rental properties
London is an infamously diverse city, home to thousands of companies from a range of sectors, that often relocate staff to corporate headquarters in the Capital. Despite a fall in EU national net migration following Brexit, latest net migration statistics show that in the year ending September 2017, UK net migration was 244,000, with the lion’s share of those moving to London.
Indeed, we’ve experienced an 11% increase in tenant registrations over the past 12 months, and the number of corporate professionals registering to relocate to London through our Corporate & Relocation Services team remains high. Conversely, the availability of great quality rental properties has decreased as existing tenants are staying put for longer, and new-build property completions struggle to meet this demand in popular areas, particularly in west London.
High quality, low maintenance properties attract tenants
Our Corporate & Relocation Services department, the largest of its kind in London, now works with over 600 organisations across varying sectors, including finance, entertainment and technology, as well as hundreds of relocation agents.
These corporate employees and their families are really searching for luxury living with minimal maintenance and are supported with healthy budgets in excess of £1,000 per week.
People are often looking for properties in central, east and west London locations, close to popular business hubs, and such strong tenant demand means landlords benefit from minimal or no void periods and achieve record rental prices.
Spring and summer trends
Demand continues to increase as we enter the busy spring/summer market. Indeed, the number of tenants registered across our network of 30 offices increased 7% month-on-month from April to May, a trend we expect to see continue until autumn.
We’re also seeing the traditional seasonal upsurge in tenants looking for properties with outside space, and larger family homes, as tenants look to secure properties in advance of the new school year in September.
London remains an investment epicentre for global investors
The fact remains that London is, and will continue to be, the world’s business epicentre and the most prominent world capital for second-home ownership. Property investors still benefit from long-term growth prospects and an ever-high demand from domestic and international tenants alike. Whilst existing properties continue to be excellent property investments, new build developments offer the perfect solution for landlords wanting a hassle-free purchase. A new build apartment is bought with building warranties and appliance guarantees, giving landlords the peace of mind that in the unlikely event that anything goes wrong, they are covered. In addition, development amenities, such as a 24-hour concierge, gyms and cinemas mean that tenants are more likely to stay for longer and be happy to pay a higher price. These factors certainly differentiate a new-build buy-to-let property from the wider market.