With the UK in lockdown 3.0 , the property market has remained open, albeit with COVID-19 restrictions in place. Since the start of the year, applicant registrations are lower than normal levels for the season .The majority of prospective tenants are looking to move later in the year, in anticipation of the restrictions being lifted. As a knock-on effect, there have been fewer transactions than the seasonal norm. With many tenants having moved out of London throughout 2020 ,we have seen an oversupply of homes in all suburbs throughout the City.
What type of homes are in high demand?
With many people now working remotely, they are spending more time than ever in their homes, thus re-evaluating their housing needs. There is now a rising demand for homes with a second or even third bedroom for use an office/work room and outdoor space. Even once normality is restored, with the technology we have available, it is thought that much of Britain’s workforce (who are in the professions) are likely to continue working from home for half or even up to two thirds of their working week. Demand for homes with a second bedroom and outdoor space, be it a garden or balcony will continue to rise.
The oversupply of homes has seen rental values fall in the capital by an average 6 % in the past 12 months, though there are regional variations. Central London and areas on the City fringes have seen falls in rental values of between 15-20 % and an average of 5 % in suburban areas. There has also been a significant fall in the number of tenancy renewals. In the past two quarters of 2020, over 50% of new tenancies arranged signed up for longer fixed terms, typically between 18-24 months, enabling tenants to consolidate their finances by taking advantage of lower asking rents. This has been welcome news for long term Investors , giving them stability in what has been a turbulent market.
Good presentation is crucial to success in the current market, specifically where older, traditional style properties are competing with modern developments. The growth in the Private Rented Sector (PRS) in recent years has seen the expectations of tenants far exceeding that of buyers. Tenants now have greater choice than ever before, good quality and well-equipped kitchen and bathroom are key things on the tenants shopping list and specifically, storage in self-contained flats.
The outlook for the year ahead
There is good news on the horizon; the vaccine roll- out programme is progressing well, and we expect to see more activity in the market over the next two quarters, coinciding with a gradual lifting of Covid-19 restrictions. The Spring and Summer months also see a shift in seasonal demand with rents in the Capital expected to stabilise, though remaining lower than 2019 levels ,taking into account the economic headwinds. Tenants will continue to focus on value, whilst Landlords must ensure that all tenants have been vetted diligently as affordability is paramount.
If you are currently a vacant property that is not renting , call our office on 020 8366 9777 or contact us via our website https://www.ashmoreresidential.com/landlord-services / to book an up to date Market Appraisal.