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Prime central London rental market proving resilient

The rental market in prime central London has proved resilient this year despite the impact of political uncertainty surrounding Brexit negotiations, according to fresh analysis.


In the first quarter of this year, rents increased by 0.2% for renewals, whilst relets rose by 0.1%, the data from London Central Portfolio (LCP) shows.



The figures also reveal that voids - calculated from the day a property falls vacant to when a new tenant is installed - stand at just 31 days. Occupancy is currently running at 94%.


The tenant mix is primarily international with less than 20% from the UK. Despite fears of a mass exodus following the Brexit vote, citizens of the EU 27 still account for more than 40%.

As far as the landlord profile is concerned, Asia dominates overseas investment, making up 68% of all landlords.

More than 50% of tenants are from the financial sector, and whilst the majority are employed predominantly in the City or Canary Wharf, many want the “PCL experience”.

The second biggest sectors are Professional Services and HNW Students.

The popular areas of Mayfair and Knightsbridge still command the highest rents per annum, with an average of £60.49 sq ft.

Kensington, South Kensington and Marylebone lead the rest at £48.32 sq ft.

Naomi Heaton, CEO of LCP, said: “Despite the multitude of external factors currently crippling the sales market, the rental market is proving to be more stable. Q1 saw rents increase slightly over the quarter for both renewals and re-lets by 0.2% and 0.1% respectively. Annually, renewals are up 0.4%.

“As a rule, rents are correlated to the cost of purchasing a property. With continuing low borrowing costs and prices falling, we would not expect much upward movement. On top of this, landlords remain concerned about Brexit, putting tenants into a strong negotiating position.

“Nevertheless the average length of tenancies is increasing, standing at 455 days in 2018 and the anticipated exodus of citizens from the EU27 following the Brexit vote has not materialised. They currently account for over 40% of the tenant base which is primarily international, with UK tenants making up under 20%.

“Not surprisingly, the financial sector and millennials represent the biggest proportion of tenants. The continuing trend is for renting smaller units as budget conscious tenants prioritise prime locations over size. Consequently one bedroom flats and smaller units return better yields than their larger equivalents. Clever space optimisation and stylish interiors are becoming ever-more demanded.”

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    It no use corralling property prices & interest rates to work out how much rent should be when the market is completely distorted with Stamp Duty Land Tax Penalties, even on a Flat of £350k = £18k SD or more likely Flat in L’don & £500k = £30k SD so how many years of your investment to get that worked off, you are not buying an acid but a tax liability.

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    • 15 May 2019 19:50 PM

    The very real threat of rent controls by that idiot Khan would be enough for me to bale from the London market.
    Take the CGT hit on current values.
    Rent controls will depress values.
    If Labour get in you can guarantee there will be rent controls.
    London would be hit harder if this occurred.

    Take your profits now and run for the hills.
    Go and buy another residential property and take in lodgers.
    Stay one day a month minimum and avoid S24 if you need a small mortgage.
    Lodgers are the way to go.
    No rent controls either!!


    Or maybe airbnb or holiday lets, or weekend lets?
    More involved but far more lucrative and you get the money up front.

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    • 16 May 2019 08:52 AM

    @John hughes
    Problem with your suggestion in a London sense is most AirBnB is illegal and those that are legal regularly exceed the 90 day maximum.
    Can't see a LL making sufficient income to equal 12 months letting.
    Other types of letting would require a change to the BTL mortgage.
    Costs involved aren't worth it.
    Obviously those without mortgages can do all you suggest .
    Not so the leveraged LL.
    The risk profile is simply far too high.
    Just imagine IR increasing with rent controls!!!

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    It's not just LL that are affected by those rogue regulations, people are so silly thinking its only LL's that take the hit, its everyone that owns a Home. Property not selling or taking a year to sell at a reduced price, when does the penny drop. Auction Houses full, not because the market is booming but because LL's getting out quick. Sales might seem good but they are the subsidized Scheme Flats from tax payers money distorting the whole market, building thousands of Flats clearly not required, no use taking figures from Housing lists they are all on that which is understandable if you are going to get subsidised housing or some for nothing freeloaders.

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    • 16 May 2019 09:40 AM

    Surely there can't be any properties for sale! !??
    Aren't all the FTB buying!?
    Cos according to that idiot Osborne LL were and are preventing FTB from buyers; but for some reason only leveraged LL trading in their own name this being his alleged reason for imposing S24.
    Perhaps as evidenced by the glacial property sales he might have been and is talking complete b######s!!!????
    As you mention those trying to sell their HTB properties are in for a rude awakening when they realise the sale price won't clear the mortgage debt.
    Gonna mean lots of HTB purchasers trapped in those properties for years


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