Monday, September 12, 2016
Central London sees fall in proportion of homes let above asking price
• In August, only 8% of rental homes in Central London were let above asking price, falling from 17% in the same period last year. (see table 1)
• 13% of rental homes in Greater London were let above asking price, a 4% fall compared with last year.
• Increased rental stock has improved tenant bargaining power when negotiating rents.
• By contrast, nationally the proportion of homes let above asking price increased by 0.2% compared with the same period last year.
• The average home in Great Britain now rents for £960 a month – a 1.5% increase compared to August 2015. (see table 2)
August’s Countrywide Lettings index shows that less people are paying above asking price to secure rental homes in Central London. Just 8% of homes were let at above asking price, falling from 17% in the same period last year. This is the lowest proportion seen in August since 2011. Greater London as a whole saw 13% of homes let above asking rent, 4% lower than the same period last year.
Nationally the proportion of homes let above asking price saw a marginal rise of 0.2%. Only Wales and the North saw similar falls in proportion to London, falling by 3% and 0.3% respectively.
The majority of rental homes are still let at asking price and the added supply of rental homes in recent months has increased this. In Greater London, 76% of homes are now let at asking price, 10% higher than last year while in Central London, 89% of homes are now let at asking price, 20% higher than last year. Nationally 78% of homes are let at their asking price, rising by 13% compared with last year.
Supply in the rental market still remains high lessening the competition between tenants to find the right home. Following both the aftermath of the stamp duty rush and changing housing market sentiment after the referendum, supply has matched or grown faster than tenant demand across the country - particularly in the South. Both London and the South East have seen the number of homes available to rent in August grow by 26% and 22%, respectively, compared with the same period last year. This is faster than their tenant demand which has grown by 8% in London and 3% in the South East. In contrast, nationally, supply grew by 26% while demand grew by 17%.
In Great Britain, average rents have grown to £960 a month but the lower growth rate, a feature for most of this year, continued. Rents in August increased by 1.5%, this is slower than the 4% growth seen at the same time last year. In some parts of the country this slowdown has translated into falling rents. Rents in Central London fell by 2% while in the South East they fell by 1.4%. Greater London, which saw a fall in rents last month, recorded a small increase of 0.9% in August. Although this still represents the lowest annual growth rate rise since 2012.
Commenting, Johnny Morris, Research Director at Countrywide, said:
“In London and the South East recent increases in the number of homes available to rent, outpacing the growth in tenants looking for a home, has meant that bargaining power is shifting towards tenants from landlords. This is slowing rental growth.
“Overall slightly more tenants are offering above asking price than last year. The majority continue to pay asking prices. Unlike the sales market rental prices adapt very quickly to changes in market conditions, meaning asking prices are finely tuned to tenant demand.”
The Countrywide Lettings Index for October will be released on Friday 14 October 2016 under embargo for publication on Monday 17 October.
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