London landlords are feeling the full force of Covid-19 with many being forced to slash rents amid a glut of available properties.
Rents in the capital fell for the seventh consecutive month in September, according to data from Hamptons International.
Aneisha Beveridge, head of research at Hamptons International, said: ‘London was the only region in England where fewer homes were let in September than at the same time last year.’
Data according to SpareRoom shows significant rental cuts in some popular london areas this year
How significant are the rent cuts?
There is no sign of a recovery in central London where rents fell 14.1 per cent annually to September, according to Hamptons.
Gary Hall, head of lettings at Knight Frank, provided a slightly more positive picture explaining that on average, across London as a whole, they have seen rental price cuts of about 8 or 9 per cent.
Matt Hutchinson, communications director at SpareRoom, said it has seen staggering rental price falls in some areas of London.
In Aldgate, landlords havr cut their rental prices by 34 per cent whilst in Maida Vale and Paddington prices for spare rooms were reduced by 20 per cent on average, he explained.
Meera Chindooroy, deputy director of campaigns for the National Residential Landlords Association, said: ‘We are definitely seeing London as an outlier compared to other parts of the country.
‘Across the board, London landlords are seeing reduced demand and reduced rent.
‘They are a lot less confident about their prospects.’
What do the experts say are causing the rent cuts?
The fall in London rental prices has been exacerbated by an over-supply of available rental properties, with 34 per cent more homes on the market than at the same time last year, according to Hamptons.
Gary Hall, said in some offices they now have up to 40 per cent more properties to try and let compared to any previous years.
‘Demand from tenants looking to rent properties hasn’t been the issue.
‘In terms of demand we’re actually back to the levels we were this time last year. It’s just been the oversupply.’
London rents have faced bigger drops than in the rest of the UK.
Meera Chindooroy believes that the lack of international visitors from overseas during Covid has negatively impacted the Airbnb sector, forcing the properties on those sites to join the mainstream rental market.
She explained: ‘The situation has been caused by the collapse of the student market and the collapse of the international market along with the disappearance of people who have jobs in London but no longer need to go into the office to do those jobs.’
Matt Hutchinson, said that although oversupply is a factor, lockdown has forced renters to re-evaluate where they want to live.
There was a 98 per cent annual increase of tenants seeking gardens, a 96 per cent increase in those wanting balconies and patios, and 44 per cent increase in people wanting en-suite bathrooms a recent survey from SpareRoom found.
Alex Harrington, Managing director of lettings at Dexters also explained there is a new found desire for bigger and greener spaces among tenants.
He said: ‘As people re-examine how they want to live and with the increase in working from home, outside space has become an important factor.
‘For an apartment this means a balcony or roof terrace, for a house a patio or garden. At the very least quick access to a park or the river is desirable.’
What does the future hold for London landlords?
Meera Chindooroy said between July and September this year, 68 per cent of landlords in central London experienced a void period
‘This is really high. To put that in perspective, the next highest is the north east at 45 per cent,’ she explained.
Gary Hall said, once international travel returns to normal, we should see rental prices eventually return to pre-lockdown levels, but when that will happen, remains to be seen.
A survey by NRLA members showed 68% of landlords in central London have experienced void periods between July and September
Hall’s advice for London landlords is simple. Accept the current situation, be realistic with the price and work on the presentation of your property.
He said: ‘If you’re trying to get the same rental income you received last year, then you’re going to find it tough to find a new tenant.
‘With Landlords benefitting from historically low interest rates, they can afford to see a bit of downturn in the market and we have not seen any exodus of landlords just yet.’
Matt Hutchinson, said: ‘I think if Covid is still with us next year, it will be enough to change people’s behavioural patterns and we may see a redrawing of the rental landscape.
‘Perhaps more tenants will focus on cities like Manchester and Bristol because they are more affordable.
‘The buy-let sector has been squeezed for a while with extra taxes and stamp duty hikes and this might be the final straw for some landlords.
‘In London, now might be the time people start to consolidate or sell up.’
Alex Harrington is more optimistic, however, saying: ‘London will always be a ‘go to’ destination, not only as a financial and business centre but for the abundance of history and culture, as well as the incredible variety of leisure activities and world class retail on offer.