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I thought it might be helpful to bring you up to date with the somewhat turbulent state of the London rental market and what we at Home Minders are doing to ensure we continue to offer you a first class property management, maintenance and letting service.
The cut in stamp duty, that runs until the end of March 2021, is designed to reignite the property market in the wake of Covid-19. It puts an extra £15,000 in the pockets of those looking to buy a property over £500,000.
This should help to stimulate sales, but the market for lettings is more challenging. Levels of supply are exceeding demand which leaves tenants in a strong position to negotiate.
In the second quarter of this year, the number of new lettings fell by almost two thirds (63%) on the same period last year. (Lonres research)
Although there was an increase in properties rented when the lockdown eased in June, volumes were still 49% down on the same period last year.
At the start of July, across central London there were 53% more properties available to let than at the same point a year ago.
As the market opens up and offices re-open, we expect the number of prospective tenants to rise. This increase in demand will probably be gradual, but helped as working from home becomes more popular than it was pre-pandemic.
The pandemic has resulted in a softening of rents. The latest figures from the LonResPrime London Lettings Index show rentals in the second quarter of this year were down 4.7% on the previous quarter across their three prime catchment areas.
For now, high levels of rental stock mean prospective tenants have a wider choice and are in a better position to negotiate to ensure their rent is in line with the market. Keen to secure a good tenant, landlords are reducing their asking prices and more willing to consider discounts.
The good news is that since lockdown eased, we have seen an increase in lettings albeit at slightly lower rates.
With Brexit and no deal on the horizon, along with considerable economic uncertainty caused by the Covid-19 pandemic, it is difficult to predict the next three to six months. I expect the market to receive a further jolt when the Government’s furlough scheme and temporary stamp duty holiday both come to an end. However, I would then predict a gradual improvement as the market settles down to a reduced level of activity. Whilst I think we are 12 months away from seeing rents return to their pre-Covid levels these unusual times may present good investment opportunities.