Residential buying and investment agency, London Central Portfolio, has found that for tenants nearing the end of their tenancies, renewing at an increased rent has been more favourable than going back into the market. With strong market conditions, landlords successfully negotiated renewal increases averaging over 4% in Q2 2022.
The time taken to let a vacant property has reduced significantly in Q2 2022. The average number of days a property stood vacant was 11.3 days, the lowest seen since March 2014. This is largely due to a lack of available stock and a surge in demand.
A revival of the rental market in PCL, since restrictions eased in the UK, has continued to result in agreed rents on new tenancies increasing. This amounted to 13% in Q2 2022. Prospective tenants have had little negotiating power given the current demand and supply imbalance, often facing bidding wars.
Tenants from the banking and financial industries represented the newest move-ins at 50%. This can be attributed to professionals in the City and Canary Wharf requiring a Central London property to overnight their two to three days spent in the office. The usual influx of high-net-worth students is anticipated over the summer months and into the autumn.
According to LCP, its tenant mix has seen the proportion of UK renters rise to 20% in Q2 2022, from 13% in 2018. This represents an increase of over 50% and suggests that the rise in pied-à-terre and part-time city living, is changing the market profile. UK tenants are providing more competition for stock in a market which has historically been overwhelmingly dominated by foreign tenants.
Andrew Weir, CEO of London Central Portfolio said, “The PCL rental market continues to grow from strength to strength as rental values for new tenancies increase by 13.3% in Q2 2022. The current supply and demand imbalance has resulted in tenants ‘locking in’ longer leases with the average length of tenancies now reaching its highest level at 25.8 months.
“Our tenant mix has seen a 50% increase in UK tenants since 2018, suggesting more demand for part-time city living as homeowners relocated to the country during the pandemic. We expect demand for central London properties to continue throughout the summer months and into the early autumn as we begin to see the seasonal arrival of high-net-worth overseas students.
“Our data reports a positive picture for the PCL buy-to-let investor with a low sterling exchange rate, pricing well below the 2015 peak and capital values beginning to increase across Central London. PCL is still at a low point in the historic cycle and remains a good opportunity for investors.”