More tenants seek to rent properties in Londonâ€™s peripheral areas Demand for flats and houses to rent in central London looks to have slowed as a consequence of record high rents, research shows.
Although demand for properties to rent in Fitzrovia, Marylebone, Belgravia, among other central London areas remains as high as ever, the surge in rental values in primary areas has priced many tenants out of living in the heart of the capital, forcing them to move out to cheaper regions instead.
Virginia Skilbeck, Lettings Director at Douglas & Gordon, commented: â€œOne of the biggest changes we are seeing is the reduced demand in prime central London as tenants are forced to move further out to save money.â€?
Douglas & Gordon report that while many corporate tenants continue to house themselves in the best and most expensive parts of central London, there is a growing trend of much greater demand from corporate tenants in the peripheral areas as many companies have reduced accommodation allowances. This is fuelling greater demand for properties to rent in St. John's Wood, Regent’s Park, Primrose Hill, among other parts of Westminster and surrounding areas, which are located on the boarder of central London.
Andrew Ellinas, Director at Sandfords, commented: “The City of Westminster has within its borders some of the most desirable real estate in the world from Buckingham Palace down, and includes most of Sandfords' home turf in Marylebone, Regent's Park, Primrose Hill and St John's Wood.” Chesterton Humbertsreports that its supply of rental properties in central London is 12 per cent ahead of this time last year, reflecting the fact that tenant demand has ‘softened’ as a consequence of cuts in corporate budgets, City redundancies and cheap mortgage deals which are encouraging more people to escape the rental market by purchasing property. Nick Barnes, Head of Research at Chesterton Humberts, said: “The prime residential lettings market remains active, however with buy-to-let landlords bringing more stock onto the market, tenants now have a wider choice and consequently greater bargaining power. This is forcing landlords to be more flexible in order to attract and retain tenants, which is often resulting in downwards pressure on rents.” Many landlords in central London have reportedly responded to lower demand from tenants by trying harder to renew existing tenancy agreements, without increasing rents. In some cases, they are reducing rents altogether. Greater demand for rental properties outside of central London is helping to push rental values – currently at an historical high – ever higher. Consequently, more investors are expected to add to their buy-to-let portfolios, by acquiring more homes in periphery areas in order to take advantage of greater activity among tenants.
But with rents rising, there are growing signs that more would-be tenants are attempting to escape the rental market altogether, by gaining a first foot on the housing rung, according to new figures. According to data compiled by LSL Property Services, the volume of debut homeowners in London almost doubled in the first four months of this year partly, due in part to easier access to mortgages. The number of first-time buyers in January to April was 92 per cent higher than the same period last year, according to LSL Property Services. They paid an average price of £195,041, 3.6 per cent higher than a year ago, and took out an average mortgage of £154,233, almost twice the level in the rest of the country. David Newnes, director of estate agency group LSL Property Services, commented: “Improvement in the availability of high loan-to-value mortgages allowed more first-time buyers to realise their dream of home ownership. Increased lender confidence has led to lower rates and a wider range of first-time buyer mortgages.” However, the hike in first-time buyer activity could be short lived. This is because the rise in buyer demand is expected to push house prices higher, pricing many would-be purchasers out of the market, forcing them to rent property instead; an attractive proposition for landlords investing in property for the long-term.