Having bounced back into fashion, London’s booming rental market is now settling down to become a long-term, “first-choice” housing solution for many more people, from young singles and couples to middle-aged downsizers.
Property experts say a structural change, hastened by the credit crunch, is taking place. Londoners are opting to rent for lifestyle reasons as much as financial ones, just like residents in most other European capitals, where private renting is the dominant tenure.
Corporate-style landlords are emerging to compete with the army of buy-to-let owners, while private developers are changing course and building homes for rent rather than sale, leading to a recent oversupply of properties and a levelling off of rents.
‘Demand for rented homes has jumped 50 per cent over the past year as aspiring buyers struggle to get on the property ladder and others wait for the slump to run its course’
Housing associations are promoting flexible rent-now/buy-later deals, and a growing number of sale-and-leaseback companies are buying homes from financially strapped owners, who remain in the property and pay rent instead.
In the background are government moves to improve the quality and professionalism of private landlords. Almost 2.5 million homes in England are being rented from about 500,000 private landlords, according to a government-commissioned independent review. It has proposed tax incentives to encourage the growth of good landlords.
Demand for rented homes has jumped 50 per cent over the past year as aspiring buyers struggle to get on the property ladder and others wait for the slump to run its course. The number of new tenancies jumped 4.3 per cent in September alone; that rise coincides with mortgage advances at an all-time low.
In London there has been a dramatic increase, not only in the supply but also in the quality of rented homes. The number of high-standard rental properties has been boosted by owners who, unable to sell, have been putting added-value interior touches into their homes.
This is welcome news for tenants. After a hike in rents earlier this year, prices have already fallen back in some parts of the capital where landlords are having to compete for tenants.
The picture is mixed
Docklands is suffering because of the banking crisis. But budget-end rentals are booming. Moreover, renters are seizing the opportunity to sign up for luxury homes and “statement lets” in central districts where they could never afford to buy.
“We’ve had our busiest year since opening our first office in 1984,” says James Drewett of estate agent Acorn, which has a string of branches in south-east London. “Ex-local authority flats are performing best for landlords,” he adds.
Marylebone is attracting “belt-tightening” renters who do not want to give up a prime central London lifestyle, says Nicola Mulkerrins of Cluttons’ Hyde Park office.
“It is 20 per cent cheaper than Kensington and Chelsea despite being such a fantastic, central neighbourhood.”
A pair of Georgian terrace houses at 44 and 45 Bryanston Square have been turned into 11 apartments and a splendid five-bedroom town house plus two charming mews houses. Rents range from £500 to £5,000 a week. Call 020 7262 6767.
Coming soon to prestigious Portman Square are 20 luxury apartments on the top two floors of a newly built office building. Rents from £500 a week. Call Knight Frank on 020 7499 1012. This development is a telltale trend, a collaboration between commercial property company Delancey and the Portman Estate.
Big office developers are dabbling in rentals because planners often require office blocks to include apartments. At the same time, estate landlords such as Grosvenor and Howard de Walden are focusing on rentals as a means of keeping control of their estates.
British Land has created 23 apartments as part of its York House mixed-use development at Great Cumberland Place, just behind Marble Arch. Rents start at £695 per week for a two-bedroom unit. For more information, contact Kay & Co on 020 7636 2000.
A former photographic studio in Marylebone Mews has been transformed into a spectacular one-off home by Howard de Walden. The rent is £2,900 a week. Call 020 7580 3163.
Residential Land is one of the biggest new-style rental companies, with a portfolio of 1,500 furnished homes across 25 central London postcodes. It buys, refurbishes, markets and manages the buildings itself, meaning that tenants do not have to deal with estate agents.
Tenants get an eight-hour maintenance pledge and guarantee to remedy any problems. Rents start at £250 a week. For information, call 020 7408 5155.
Leigh Williamson, 26, shares a two-bedroom flat with a friend at a recently converted ambulance station in Regency Street, Pimlico. The rent is £400 a week. “It’s modern, well maintained and great value for the area,” he says. “We spent weeks searching for somewhere suitable. Most flats were overpriced and quite shabby.”
Unite, a private company that has made its name building student accommodation, has launched a rented housing service for graduates. Called Livocity, the first development of 62 studio apartments has opened in Marylebone, and coming soon are schemes in Fulham, Highgate and Camden.
Furnished studios cost £300 a week — or £150 a person for a couple sharing — including utility bills, council tax, free broadband, digital television channels and telephone line rental. Call 020 7580 4105, or visit www.livocity.co.uk.
Moreover, there is no deposit to pay, while normally in the private-rented sector tenants have to stump up the equivalent of at least six weeks’ rent.
Rooms on refurbished houseboats are offered by Nice Group. Rents are £750 a month. The fast-growing company has plans for a fleet of vessels moored on the Thames between Barking and Battersea. It already has a portfolio of 250 houses where rooms are rented to mainly young professionals. For further details, call 0845 466 0003.
Rent to buy
A new-home option that is offered by several housing associations has been embraced by some niche private developers.
Typically, it works like this. You rent for three years at 80 per cent of the market rent, then get the chance to buy a share, at least 25 per cent. Alternatively, you rent for one year at the going market rate. Then, if you decide to buy, the rent you have paid becomes your deposit.
The upside is that you avoid the risk of negative equity and you can test-drive the property.
Developer East Homes is promoting the scheme at several east London locations, including Stratford, Bow, Barking, Silvertown and Stepney. Rents start at £509 a month. For more information, call 0845 600 0830.
MacDonald Egan, a developer with several schemes in Deptford and New Cross, is undertaking to refund rent paid over the initial three-year period equivalent to 10 per cent of the agreed purchase price of the new home. For more details, call 020 7234 9494.