The London rental market remains active but there is some softening in prices, especially with family houses.
Those landlords who have had tenant changeovers in recent years are more aware of the current market conditions and are open to pricing accordingly. Those landlords who have been fortunate enough to have long term tenants require more educating, as many are now facing several years’ of price reductions in one hit.
Some letting agents are still overvaluing rental properties in order to win instructions, and some landlords are being too aggressive on their asking prices. This can waste crucial marketing time and/or lead to void periods.
The key to protecting rental returns for landlords is to price realistically (and reduce the price proactively if needed) to prevent void periods destroying the yield.
We are therefore being extremely targeted with the advice we are providing our landlords, appointing the most appropriate letting agents and setting the right asking price level at the outset.
We believe the softer sales market in London is the main cause for lower rental prices. This is principally based on many would-be-sellers choosing to rent out their properties for the next 2 – 3 years, rather than try to sell them in a weaker market. Consequently this has increased supply in the rental market and given tenants a lot more choice, pushing down rental prices in many cases.
This is good news for tenants. We are still seeing healthy demand from individual tenants and companies are still relocating employees to London. Corporate budgets are being reined in for many mid-level executives and we have seen budgets reduced with some of the companies whose employee relocations we handle.
It is not all doom and gloom. Last week we achieved full asking price offers on four properties we manage for landlord clients. In each case they were on the market for less than one week and we achieved the same rent or a slight increase from the year before. This demonstrates the importance of reliable market intelligence, a sensible marketing strategy and setting a realistic asking price.