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TODAY'S OTHER NEWS

Massive spike in landlords reducing rents in London, admits agency

The challenges of London’s rental market continue to play out in the latest market snapshot from one of the capital’s biggest lettings agencies, Chestertons.  

It says at the end of September there were double the number of rental properties available on the market compared to last year, meaning that tenants have far more choice and are negotiating harder on prices. 

This has resulted in a 325 per cent spike in landlords reducing rents.

Perhaps unsurprisingly in the light of excess supply and falling rents, there are many tenants on the move across the capital.

Chestertons reports that the number of tenants moving home shot up 45 per cent in September compared to last year, and up 53 per cent on August this year.

The agency says September is always the busiest month of the year for London's rental market; enquiries on rental properties are up 49 per cent compared to September 2019 and both viewings and offers up 47 per cent. 

 

 

Richard Davies, Chestertons’ head of lettings, comments: “September was an exceptionally busy month as we saw overseas tenants start returning to London and a jump in the number of students taking properties as universities confirmed their teaching schedules.

“All the signs point to the market to remaining busy throughout October too, and we have done 74 per cent more viewings so far in October than we did last year, and moved 55 per cent more tenants into new properties” he adds. 

“However, it is very clear that only sensibly-priced properties will find tenants in this market and most landlords are reacting quickly to this by adjusting their prices accordingly” he concludes.

  • Mark Wilson

    Old new, central London rents are taking a kicking. The maths for some agencies wont work in this new world - transaction volumes down 50% rents down 30% , revenue down 70%

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    Look on the bright side Mark.

    Lower rental demand in London means higher demand elsewhere with limited availability, so rents elsewhere will soar. Happy days!

     
  • Ruan Gildchirst

    What will it be like next year? Loads more empty properties and desperate LLs in a price war trying to undercut each other

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    • 21 October 2020 13:46 PM

    London properties will ve cheaper to rent as nobody will wish to reside there.
    Those an hour commute away will become the new London where rents will be high and insufficient supply.
    We could see a massive surge of HB tenants to London.
    Desperate LL will take allcomers.
    They won't have much choice.
    Without the commuter London is finished

     
    Mark Wilson

    London is the start, I expect a ripple effect and the same will happen everywhere.

     
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    London is suffering due to a drop in demand.

    The property shortage continues elsewhere as will the booming rental market, especially with the rent dodgers preventing properties from being let to decent tenants willing and able to pay market rents.

     
  • Kristjan Byfield

    Yowser- a lot of bleak news being churned out today about London. We have actually seen transaction volumes increase, rent impact has varied- I would say the average impact is 10% with some seeing no reduction and others closer to 15-20% with rents returning to levels akin to 2012. All markets are cyclical and that's just part of the journey. Tough markets require an agent to have quality market insight and expertise, having been through at least 1 prior recession definitely helps, and it is a time for communication. Filling landlords heads with pie in the sky rents in this market is the worst thing you can do- total condour backed up by facts and results is all that is needed to navigate this difficult time.

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    • 21 October 2020 14:00 PM

    The demand for London property has evaporated.

    Londoners are leaving.
    The facts are that commuters even back in the 70's onwards have always been vital for the London economy.

    When a massive workforce essentially disappears it is bound to have a major effect on a local economy.

    The last time such a major change occurred was the Industrial Revolution.

    Essentially those workers are now returning to the countryside.

    This no bad thing.
    But Govt will have to support infrastructure that is no longer required by commuters.
    The railways being the obvious service that needs nationalising.

    It is a service that cannot be operated for a profit.
    But it is a service that is vitally needed for the economy.
    Same for Tfl.
    The disappearance of the commuter has revealed the rail network cannot operate at a profit.

     
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    ... and don't forget that rent defaults are only up from the usual 2% pre-COVID to the 3% we see now.

    And if anyone tells you that only 15% of commercial rents are being maintained, don't believe it.

     
  • Matthew Payne

    It could get worse, as Londoners face the reality soon of paying off the £6bn TFL bailout. Inflation busting fare increases, the congestion charge zone set to extend to the north and south circulars now @ £15 per day, and now I read today that a council tax precept charge is planned from April. All of that adds up to a meaningful amount every month.

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    • 21 October 2020 20:17 PM

    Yep the CC will be a disaster.
    Used to live literally just outside the NC.

    Can you imagine just paying £15 per day for having a car parked on a public road!?

    This CCZ will cause many to sell their cars.
    Public transport isn't exactly crowded!

    I can see many address details being changed to outside a new extended CCZ.
    Londoners within this zone will be selling up ASAP.

    I can see it eventually being extended to within the M25.

    This would massively degrade quality of life if it costs £4000 a year just to have 1 car in the CCZ.

    If I was buying again I would not buy a property inside the M25.

     
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    • 21 October 2020 23:08 PM

    It'll be a good year or so for tenants while things find their new equilibrium - good for them, that's the market. I remain bullish on London in the long-term, it's our only truly global city that can rival NYC, Silicon Valley, HK, etc. It's pretty unique British/European terms (and I say this as a proud Brummie). House prices are holding up (ish) and even rents are still way above the rest of the country. Given London's lead in finance and high tech industries, it's probably better-placed to prosper than other cities once the current moment has passed.

    Remote working will increase but, things won't be fully remote once a vaccine is out. Early career folks will still be in the office 4-5 days a week. Once ~20% of people are back in the office most of the rest will follow (at least for 3-4 days a week) as they'll be not want to be overlooked for promotion. AirB&B will take up some properties in West London again. Zoom meetings aren't the same - especially for the legal, finance, and create work that a lot of Londoners do.

    I'm very much hoping this Birmingham / Manchester revival is sustained though. Generally, everywhere in the UK benfits from a strong London (and vice versa).

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    • 21 October 2020 23:30 PM

    I admire your faith in workers returning to their London offices.

    I believe you are wrong.
    This WFH will be a major societal change.

    As such it will have massive ramifications for the SE economy.

    No way will there be a drift back to the London office.
    Most office work can be done from home.

    The rental market in the SE will be transformed by WFH.

    Council tax precepts and an extended CCZ will cause many to leave.

    London will become prohibitively expensive.
    Move just outside the M25 and that will be you future-proofed.
    But move to a property near a stn for easy access to Central London when required.


     
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    • 21 October 2020 23:44 PM

    We'll know who is right in 2022, I guess !

    Watch this space

     
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    "Early career folks will still be in the office 4-5 days a week."... easy money to be had but, only if you invest ?

    BTW, what's the vice versa of the UK benefitting from a strong London ?

     
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    • 22 October 2020 20:28 PM

    Hi Sebastian,

    I have a feeling you already know what I am going to say London being a catalyst for the rUK economy - I'll say it anyway!

    - London is furthest ahead in tech and finance - the money and expertise from these industries will spread right across the country in time but, we need a centre of excellence
    - London attracts most of the UK's FDI - if London ceased to exist I don't think these investors would go to Birmingham or Manchester, my guess is they'd go to New York or Frankfurt.
    - The FDI going into London is part of what makes London 25% of the UK economy (despite only being 15% of the population). That money going to the exchequer helps us all.
    - London is an the kind of city where people from all over the world want to work /study - doctors, scientists, business people - having these people in the UK is incredible to building business and opportunities for everyone!

    There are great cities in the UK but, I know that my career wouldn't be what it is today if I haven't been able to move to a thriving London 20 years back!

     
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    @ Gerrad Timms, I take and agree with every thing you say about London, but wild horses would never drag me there , I 'm a Norfolk boy, while there is money to be earn't in London cost of living is high, that way of life may suit many, it certainly would not suit me .

     
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    @Gerrad Timms...

    Apologies but you didn't answer the question - I fully understand how the UK benefits from London but (again) what is the vice versa... ie. how does London benefit from the rest of the UK ?

    Maybe you didn't mean to write, 'vice versa' ?

     
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    • 22 October 2020 00:14 AM

    Yep considering where to invest I guess is very much a guessing game currently.

    There are too many unknown unknowns!

    Personally I believe many have fallen out of love with London.

    They are fed up with the increasing diversity and are leaving for less diverse areas.
    I have direct experience of this.

    You only have to see how London votes to see why many are leaving London.
    Essentially there is a thin ring around London of less diversity which doesn't vote Labour.

    Even these are abandoning London.
    It was happening well before CV19 hit but now things are speeding up.

    Be interesting to see who makes the better investment decisions.

    I'm betting away from London!

    I guess that my guess will be correct!!

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    • 22 October 2020 15:17 PM

    @seb forbes

    You can still have a strong London.
    Just that it will be working from home.
    Bankrupted sandwich shops won't affect the income London brings in.

    Though of course there will be substantially reduced footfall from commuters who won't therefore be spending in London shops.

    But where the commuters live will benefit from discretionary spending which will be good news for struggling High Streets.

    For too long London has sucked spending away from areas outside London.

    The death of the commuter is good news all round.



    Long may it last.

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    But still lots of p*iss, sh*t and stinky properies if tenants are allowed to have pets......

     
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    Bankrupt sandwich shops, I've got one of those, well the lady's on the verge of bankruptcy, she has been a good tenant of mine for more than 24 yrs, I've not charged her any rent since March in the hope that she could get going again, but it is really not looking good.

     
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    • 22 October 2020 17:25 PM

    @anthonytownshend

    Yep my sympathies to you and your tenant.

    This pandemic is destroying what have been perfectly viable businesses.
    Your tenant should be able to avail herself of the various Govt support packages.

    But ultimately if WFH continues it could well be that businesses dependent on commuters will no longer be viable.

    The business landscape will be irrevocably changed.
    Yes certain numbers of commuters will return but not in sufficient numbers to support businesses.

    This is just a business risk that any LL faces.
    I certainly don't believe there will be a return to business as usual.

    LL will need to reappraise their business models if they wish to survive in the future.

    This will be very painful for many LL and adjusting such business models will cost many LL dear!
    But hey that's business!

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    Andrew or Andy is just fine Paul, but please not Anthony

     
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    • 22 October 2020 17:47 PM

    😆 I get names confused sonetimes!

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    It's an age thing Paul, so do I.

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