Last month, referencing service Homelet carried out a survey of the London letting agents that the business works with. The survey was designed to coincide with the release of Homelet’s February Rental Index and we think that the two together provide some interesting reading. Ok, so it might not be as fascinating as catching up with the latest Election 2015 shenanigans or what Zayn from One Direction did next but if you want to get a good overview on the UK lettings market in 2015 then this data from the capital plays and important role in that.
One of the first interesting pieces of information comes from Homelet’s February Rental Index, which showed that in February this year average rents in London were 5% higher than the year before. This takes the average London rent from £1,322pcm to £1,390pcm. Although it shows that the rental market is still growing, what is interesting is that this is the lowest growth rate of the last 12 months. In August last year, for example, the rate of growth was 11.1% more than the previous year and in January this year it was 14%. Most experts have indicated they think the values in the housing market – including rents – could slow during the course of this year, even only temporarily. While 5% could easily be a standard seasonal drop or a pre election reaction, even some reduction in rental rate growth would take the pressure off for many.
In the survey itself, Homelet found that most (80%) of the London letting agents that it surveyed believe that, when it comes to supply and demand, towards the end of 2014 there were more tenants than available properties in their areas – across London. Only 10.9% felt there were more properties than tenants and 9.1% felt like the balance between the two was just right.
Survey questions about demand for rental properties in London were measured on a scale of 1-10 and around half of those surveyed pegged demand for rental properties in London at 8 out of 10. Around a quarter gave demand a 9 out of 10 and marginally less 10 out of 10. Very few gave it less than 8 out of 10 and only one brave soul opted for 5 out of 10 or lower.
Finally, on the question of affordability, 56.4% of letting agents in London felt tenants were struggling to afford to move into a new property in the capital. While 38.2% disagreed and felt that this was not the case. The agents identified a number of trends that they had seen with respect to the ways that tenants tried to overcome this problem – just over a third of the agents were seeing tenants sharing to make renting more affordable, whether with a friend or colleague. 33.3% were negotiating the rent and 26.2% looking at alternative locations.
While the survey doesn’t contain a huge number of surprises there are some small insights to be gleaned. For example, we thought that the number of people negotiating the rent was an encouraging statistic – if you think a property is overpriced and out of range it’s always worth putting in your offer. We also found it interesting that even agents are willing to admit the market is failing to meet demand – and for many is completely unaffordable. Whether this will result in any action to cap or control London rents remains to be seen but nevertheless awareness is spreading.
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