A perfect storm is brewing in the lettings market with rents spiralling, driven by increasing demand fuelled by workers returning to London, landlords selling up and a lack of social housing being built, according to leading estate agents Winkworth.
Dominic Agace, Chief Executive of Winkworth, with more than 100 offices nationwide, including over 60 across the capital, told the latest episode of The Property Exchange, Winkworth’s podcast: “Landlords are selling up. People are rushing back to the cities for work for the first time, having been working remotely, fuelling demand. People can’t pay beyond what they can afford. I would expect in the coming year that rent rises would slow, albeit still remaining fairly high. It’s a minefield for the Government. They are wedded to a path to legislate and reform to help renters. It’s admirable to want a higher standard of rental accommodation. However, removing tax relief on interest payments that aren’t about improving stock is putting landlords under water. The government needs to step away from the sector being a political football and focus on supply and how they can create policies that will improve supply. Standards will improve if there’s competition for tenants and rents will stop going up if there’s more availability. Build to rent is one solution but it’s just not going to come quickly enough to solve the current challenge.”
Within a 20 minute commute to the West End, Winkworth Shepherds Bush has seen rent rises of over 20 per cent since this time last year. Rupal Patel, who runs the West London office, highlighted the case of a one bedroom flat on a main road which received multiple offers over the asking rent, with tenants offering to pay a year’s rent upfront to clinch the deal. Rupal told the podcast: “One and two bedroom apartments are renting out very, very quickly. We had 70 enquiries within hours of one flat being listed. A lot of landlords are exiting the market, as a result of changes in tax and new energy regulations for energy performance certificates. More than half the landlords we are currently dealing with are going to have to invest heavily in their properties as a result, putting in new windows, new insulation and new boilers, with the cost of materials having increased substantially.”
The outlook is brighter in Clerkenwell and the City, where loft-style apartments and period conversions in garden squares are among the most coveted rental properties. Adam Stone, lettings manager of the Winkworth’s Clerkenwell and City office, says they have seen a rise in buy to let investors, as a result of the weak pound. He told the podcast:” Investors are jumping on opportunities in central London because rents are so high. We’ve only lost a few landlords who have sold and we are finding a lot of overseas investors coming on board. With all the tax implications and other compliance issues that landlords need to deal with at the moment, we not going to see a flood of stock on the market, which would bring down rents in the short-term.”
He advises tenants to be proactive to stand a chance of securing the rental home they want. “We put on a property and overnight we get 120 leads. I would advise a prospective tenant to go to the agents’ office or phone the office direct and not to wait for a response via one of the portals.” His advice for landlords is: “There is a lot of new legislation and landlords need a reputable agent to manage the property fully, not only to get the best rent but to keep a tenant happy to ensure they stay for a long period.”
To tune into the latest episode of The Property Exchange, presented by commentator and broadcaster Anne Ashworth:
.jpg?width=1920)
