Welcome to the world of London’s property lettings market! London is considered a bustling metropolis and the city’s real estate is experiencing a remarkable resurgence.
The capital of the UK has long been a haven for property investments, offering a transparent and secure market for international investors. If you already own property here, you’ve made a wise choice. But if you’re considering jumping into London’s property market, this article is for you.
Let’s take a closer look at London’s thriving property lettings market, its remarkable recovery from recent challenges and the key factors driving its demand.
London holds a stellar reputation among international investors. It provides excellent potential for wealth preservation and a hedge against inflation. Even during times of global crisis, London’s property market has consistently attracted investors offering liquidity and stability.
Despite facing significant hurdles in recent years, including Brexit and the Covid-19 global crisis, London’s property lettings market has shown remarkable resilience. Not only have rental prices bounced back to pre-Brexit levels, but they have also surged significantly in many parts of the city, leading to stronger rental yields.
One of the primary factors behind the lettings market’s solid performance is demand and supply. Demand for rental properties in London has outpaced supply, partly due to delays in new completions during the Covid-19 period.
Since more people started returning to London post-Covid, there has been a continuous surge in demand for rental properties. 2022 witnessed the hottest rental market ever, with demand at its highest.
The ratio of tenants to property in London stands at an average of 3 to 1, owing to the growing number of working professionals and students back in the city.
London’s property landscape has witnessed a stunning transformation with the completion of the Elizabeth Line (Crossrail). It has sent property prices near this newly opened line soaring in areas like Woolwich, Manor Park, Stratford, Forest Gate, Hayes and Harlington. There are more options for tenants looking at Zones 3 and beyond since these areas now have easier reach to the capital.
For instance, Colindale in Zone 4, thanks to its accessibility to central London, offers rental yields as high as 6%.
London’s status as a global academic hub has positioned it as a top choice for international students, especially with students swarming back to the city post-Covid. Over 450,000 overseas students study in the UK annually, contributing over £20bn to the UK economy and London universities host the highest number of international students globally.
The average monthly rent for postcodes around top UK universities such as Lincoln and Durham is slightly below £700 per month; however, it is highest for London’s Imperial College, where the average asking rent is £4,140 per month on average.
Following in close are King’s College London and London School of Economics (LSE), where the average monthly rent is above £3,100 per month. Properties around University College London (UCL) command an average rent of around £2,400. At the same time, accommodation near the UK’s top two universities, Cambridge and Oxford, yields an average rent of around £1,500 per month.
Students are often assumed to be terrible tenants due to potential property damage and wild parties. However, our experience shows that having students as tenants has several advantages.
1. As students often face challenges passing reference checks, they often pay six months to 1 year’s rental in advance. This usually provides landlords with a sense of financial stability in terms of rent payment.
2. Students usually secure their properties well in advance because they need a place to stay before school term begins. This ensures minimal void periods between tenancies.
3. Students usually have fewer or no additional demands compared to other tenant groups. Their primary focus is on studies, making them relatively low-maintenance tenants.
Key factors influencing tenant choices include proximity to efficient transport links, access to green spaces for an improved quality of life and the presence of work-from-home facilities due to the rise in remote work.
In-built amenities like gyms, swimming pools and private cinemas have also gained popularity as tenants spend more time at home. Proximity to workplaces, schools, restaurants, cafes and supermarkets remains a top consideration for tenants.
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For studio, one and 2-bedroom units, 90% are rented out furnished. Most tenants would be looking for fully furnished units, and properties with better quality furnishing usually get more offers and get rented faster.
To summarise, London’s lettings market is experiencing an unprecedented boom. Average asking rents in London have reached a record £2,480 per month, while for inner London, average rents surpassed £3,000 for the first time. Rental properties are letting even before being listed, with waiting lists of fully referenced tenants becoming common.
Landlords can expect a rental increase of up to 6% in 2023, with the peak performance likely occurring between August and October — this period typically experiences the highest demand for lettings in London.
Accredited with over 60 years of experience in property lettings and management, Benham and Reeves can be your go-to partner for London property investments. With 21 letting branches throughout the city and 13 international offices, including Singapore, we offer expert investment advice, property acquisition assistance, handover and snagging support, furnishing and refurbishment, lettings services, complete management services, tax return filings and support for property sales.
Benham’s lettings service is designed to simplify finding reliable tenants for your property. We manage marketing your property, screening potential tenants and facilitating a smooth moving-in process with all the necessary tenancy paperwork.
We proactively approach tenants two months in advance to prepare early to minimise void periods between tenancies to inquire about renewing their tenancy agreements.
With our comprehensive property management service, you gain the support of an experienced property manager dedicated to overseeing every aspect of your unit’s tenancy and property management. From handling any necessary maintenance or repair work to collecting the rent and ensuring timely payments, the Benhams & Reeves team takes the day-to-day responsibilities so you can sit back and enjoy the benefits of your investment.
London’s property lettings market is thriving — with demand outstripping supply, rental yields are rising, making now an ideal time to tap into this dynamic market.
If you have any questions or need further assistance in exploring London’s real estate market, feel free to reach out to us at https://www.benhams.com.sg/contact/ or visit your local Benhams branch.
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