Published: 13/10/2021 By Mathilda Boyle
The prime central lettings market has seen a recent rejuvenation as London leavers head back to the office.
Overseas tenants, students & workers return to prime property following a decline in interest during the pandemic. This dramatic bounce back has put strain on the rental market as prospective tenants outweigh “chronic shortage” stock. This trend is replicated across the world in other business cities, alike to New York, who are experiencing the same sudden demand. However, not only metropolitan areas are being affected as shortages are also found in popular suburban and commuter locations.
Demand reached record levels in September, with the number of tenancies being the highest monthly total in the last 10 years. Knight Frank reports stated new tenants registration at 56% higher than September 2020.
This level of demand is resulting in competitive bidding in the landlords favour, as potential tenants strive for the best of the remaining properties. Landlords, having taken cuts to their rental income during the pandemic, are using this time to make up for losses by seeking the highest possible price. Tenancy agreements that are coming up to a renewal period may see a dramatic increase in rent price in line with the markets RPI. The risk factor in this for landlords is minimal as the vacation of a current tenant will not necessary leave a void period due to the current demand.
Lonres reported the average let home spans 931 sq ft in Prime Central London this year; 8% (84 sq ft) smaller than that of 2016-2019. Speculation suggests that people are opting for smaller spaces in the right location as a pied-a-terre or temporary residence. Tenants are also locking into longer contract periods as they plan to return to their normal life living in the city. The Mortgage Finance Gazette predicts that Prime Central London rents are set to jump by 5% over the next 6 months.
Currently the domestic market is still dominating but as international students and workers return to the UK & prime central London, we will see the balance bounce back.