The Rental Market Remains Strong
Since our commentary on the rental marketplace (read article here) for Q1 back in March, Savills’ latest report confirms our confidence in the growth of the residential rental market was well placed. Continuing the trend from the beginning of this year, rates of tenants seeking prime residential rental property as a whole has steadily increased throughout Q2.
Researchers at Savills have identified that this continuation of demand is as much about quality and value for money, as it is quantity. This means an emergence of tenants seeking properties within and outside of London which may have helped to keep numbers of renters up. In particular, rentals in the commuter zone saw a small increase in Q2, and as reported previously, smaller properties with a weekly rental value of less than £1,500 continue to outperform larger properties.
Prime London Markets
Within London, rentals have performed best in the emerging prime market in the last five years in areas such as Queen’s Park, Shoreditch, East Putney, Pimlico, King’s Cross and Shepherd’s Bush. Similarly, newly established prime London market locations such as Westminster, Victoria, Primrose Hill, Fitzrovia and Limehouse have also performed slightly better than the established prime London market which includes Mayfair, Knightsbridge, Belgravia, Canary Wharf and Islington.
This is likely owing to a shift in the pattern of corporate tenants’ spending, as well as the geographical diversity new build properties have created, drawing international tenants, who represent 61% of the prime London market, outwards from traditional prime London destinations. However, it should be said that there is still high demand for rare and desirable rentals within the established prime London market.
Outlook for Landlords
In May, we took a look at the proposed changes to Section 21 notices and their potential impact on landlords (read article here). Whilst new legislation has not yet been passed, the proposal remains the same, and landlords can expect to repossess use of their property from tenants through evidenced intent to sell or move into the property themselves.
As Savills report, the value of their property will not necessarily be impacted owing to the security of the tenure afforded to the tenant, and it is suggested that consultations between parties may well consider measures whereby landlords can regain possession of their property for purposes of protecting their investment.
Other factors such as limitations on tenants’ fees charged by lettings agents and restrictions on tax deductibility of mortgage interest have also altered the rental market landscape. Despite this, rental markets are forecast to steadily increase over the next few years and we continue to work with active overseas and UK investors seeking residential properties within the prime London and wider UK market.
To see how we can help you, please call us on +44 (0)20 7266 8500 today.