London Rents are they on the way down?

Read this article to see why we had to take a 15% drop in rent to let our property in London

We invest in the North West two thirds of our team come from London. We still have property there. This summer we saw rents for a flat we have in London fall substantially due to lack of demand. This article will explain what happened and possible reasons why. Judge for yourself what this may mean.

What follows is a point of view based on actual experience. We put it out there so you can judge for yourself if it resonates with you or not. It is not based on statistical analysis

This summer one of our flats in North West London just a few stops from the centre became vacant. We expected to rent straight away as usual but we did not. We got on to our Agent who we trust and has always done a good job and he said the market seemed to have slowed. We phoned around other agents. They said the same. We put the situation on line on our social media sites and got a similar response. What was happening? There seemed to be 4 factors in play

  • Increased supply following the rush to buy to avoid the 3% stamp duty rise
  • Less demand because Europeans generally where not coming over in the same numbers as pre-Brexit
  • Less demand because many Londoners were moving to the fringes of Greater London to avoid high rents and to get a better quality of life.
  • An immediate response by several Landlords who simply could not wait to find the right Tenant but wanted (or had) to let immediately. So, that superior properties to ours were coming into our price range. Properties that we could see were better than ours

The factor of less demand seemed the most important. Clearly the spread out from London if it is happening will be increased when Crossrail becomes operational.

But the point made to us about Europeans was the most interesting and one we had not foreseen but when you think about it makes sense. Many people mainly young and so potential renters have come to London from all European countries.  They are completely different from the demographic of British people who have gone to Europe most of whom are older and are looking to retire and have the funds to buy so are unlikely to be renters.

These Europeans come here to make a better life for themselves because their own countries do not offer them the opportunities they find here.

But you may say why should they stop coming now when we are still in the EU.?  Because when they come they know it is going to take time to establish themselves. They are going to have to get used to living in a strange new country. Now if you have the unlimited right to stay that is not a problem.  But if you think in 2 years you may have to leave then really is it worth the effort?  And apparently, this thinking is having an impact on enough potential new arrivals to cause a slowdown in numbers.

As I say I do not have the statistics to know whether this is true or not. But to me it makes sense and I put it out there for you to judge if it is worth consideration when deciding what is the future of buy to let in London. What I can certainly say is that for me it was necessary to take a 15% hit on my rent to enable me to find a Tenant.

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