London rents fell in July, according to the latest figures from Countrywide, bringing the average for a newly let home to £1,280 a month.
The fall was triggered by a flood of new rental homes coming on to the market. There were 33 per cent more homes to let in the capital last month than there were 12 months before, substantially improving tenants’ options. However, rents are still far too high in relation to young workers’ pay.
The increase in available properties, from about 8,800 to 14,000, is partly due to the stamp duty rise on buy-to-let homes, which came into force in April. Would-be landlords rushed their purchases through to beat the deadline, resulting in a short-term influx of new rental properties coming on stream.
Nik Madan, group lettings development director of Connells Group and president of the Association of Residential Letting Agents, believes Brexit has also played a part. “Post-Brexit pressure on prices in the sales market has led to discretionary vendors looking to rent their properties for a year or two until the sales market stabilises and prices increase,” he explains. “This extra supply has led to downward pressure on rents.”
More “build to rent” developments are also springing up across London, adds Olivia Pegrum, regional lettings director at Hamptons International, who now has 35 per cent more rental stock on her books than she did a year ago.
The biggest beneficiaries of the shift from a landlords’ market to a tenants’ market are renters considering moving house.
Madan estimates that demand for rental properties has fallen from about two candidates per property last year, to an equal number of prospective renters and available homes this year. Meanwhile, he believes the letting price of two-bedroom flats has fallen by about 10-12 per cent over the last year, with a 15 per cent fall in letting prices for three-bedroom homes — although this is not necessarily being reflected in asking prices. “Landlords are accepting offers,” he says. “It is a great time to rent.”
In Wapping, Garry Hall, a partner at Knight Frank, says rents have dropped five to 10 per cent in the last three months, while the number of available homes is up 47 per cent in a year.
In Lewisham Tim Jordan, branch manager of Leaders, says rents are flat rather than falling, but the choice for tenants has improved by about 50 per cent and leaves room for rent negotiation. Hamptons’ Olivia Pegrum, who covers west London, says: “The price is a guideline only so if you have a good reason to believe the property is not worth the rent, then put forward a considered and reasonable offer with facts to back it up.
“Different landlords want different things. An investor may only be interested in the money. A private landlord who values their property will want a tenant who will look after their home.”
Connells’ Nik Madan believes that landlords respond best to being offered something in return. Tenants might get a good deal by agreeing to move in quickly to minimise void periods, signing up for a year or more, or offering to pay rent quarterly.
There are also some types of property that, predictably, will be harder to let and therefore easier to score a discount on. “Properties with blight, such as those next to a motorway or on a flight path are always harder to rent, and often landlords will discount the rent,” he adds.
Renters looking for a bargain would also do well to study the Tube map, and see where major works are planned because affected areas can prove easy pickings. Marc von Grundherr, lettings director at Benham & Reeves residential lettings, says areas on the northern reaches of the Northern line saw price falls in recent months, in part because the Tottenham Court Road interchange between the Northern and Central lines was closed for several months. “Things like that have a big impact on rental demand,” he says.
Walk-up flats, those with tired décor, and in developments without glitzy extras such as gyms and cafés, are also harder to let, says Von Grundherr, and therefore easier to bargain on.
Knight Frank's Garry Hall advises finding out when the last tenants moved out of the property. “Some landlords are more flexible than others, especially if it’s been empty for a little while. Chat to your agent and they should give you a good steer. However, be warned, don’t be too cheeky with your bid. It’s important to make a good impression, or they may be less inclined to take your offer,” he says.
For long-term tenants simply wanting to stay put, discussing a rent freeze or fall — and any upgrades you would like to see made to the property —is also worthwhile in the current climate.
“It’s not very British but ask your neighbours how much they’re paying in rent,” adds Von Grundherr. “It’s an uncomfortable conversation but can be very enlightening.”
Madan concludes: “Landlords want to attract the best customer who will pay the best price and then keep them in situ for as long as possible, in order for their property to be a good investment. Landlords who upgrade the decor, take away unwanted furniture, and generally provide a good management service throughout the tenancy, keep their tenants longer.”