Tenants in parts of London are benefiting from rising stock levels, as a wider choice of properties forces landlords to reduce their rents.
According to the latest HomeLet Rental Index, landlords in London are having to do more to attract tenants to their properties as tenant demand has weakened.
The London Central Portfolio (LCP) has found that the capital’s new build rental market is suffering in particular, with many tenants favouring period properties over new builds.
Naomi Heaton, CEO of LCP, said: “In much the same way as we see in the sales market, there is increasing fragmentation in the lettings market, according to property type [new build or traditional stock] and by price point.”
She continued: “Alongside the oversupply of rental stock in new build heartlands, the uncertain economic outlook has resulted in tighter tenant budgets.”
In ‘new build heartlands’ like Nine Elms in South London, where extensive regeneration and housing development is taking place, the number of new, high-priced properties being built exceeds tenant demand, leading to a drop in asking rents.
In parts of the capital where little new build activity is taking place, the rental market has been more resilient. For example, prime central London has seen stock levels increase by only 5%. Despite the prime central London sales market being affected by higher stamp duty, there is still a demand for rental properties in these areas, and with stock levels limited, this has helped to keep rents on a steady course.
Rents are predicted to fall in many parts of London during 2017.
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