Thousands of “accidental landlords” - owner-occupiers who want to sell but cannot because of the mortgage freeze - have flooded the market with homes. This oversupply is helping to push down rents, making accommodation more affordable and enabling wannabe first-time buyers to save for a deposit while renting.
Across London, rents are falling at a faster rate than property prices, down an average of 9.8 per cent in the last quarter of 2008, whereas sales prices dipped 7.6 per cent, according to Hamptons International. This equates to an average drop of £145 a week. Islington and Wimbledon were the worst-hit areas; Notting Hill and Shad Thames the least affected.
"For new tenants and those coming to the end of agreements, the picture is extremely positive,” says Rob Bruce, the agent’s research director. “Landlords will have to be more flexible to secure a good tenant.”
'Renting is now cheaper than buying in almost every London borough'
Residential Land, which has a portfolio of 1,200 properties in central areas of the capital, reports a brisk start to the year. “January is normally the quietest month, but business is up 10 per cent right across the board, from studio flats to houses,” a spokeswoman explains.
Despite the recession, corporate lettings are holding up because companies are trimming costs by switching from hotels to cheaper serviced apartments. Rents range from £275 to £3,000 a week.
Renting is now cheaper than buying in every London borough except Hounslow (where the cost difference is marginal), according to property analyst Hometrack. The average rent on a two-bedroom flat is lowest in Barking & Dagenham at £200 a week, and highest in Kensington & Chelsea at £700 a week.
London-wide estate agent Ludlow Thompson says the cheapest rents can be found in south-east London. For example, one-bedroom flats in New Cross cost from £145 a week, and from £180 a week in Greenwich.
Tenants renewing their contracts are in a strong position to haggle with their landlord for a rent reduction or demand extras, perhaps a flat-screen television or new sofa, even complete redecoration of the property. The last thing a landlord wants is a “void” period, when they have no tenant, as this can sabotage the buy-to-let arithmetic.