Tenant frenzy in the London lettings market

The silly summer season really seems (like the weather) to have come to a grinding halt as the market has changed dramatically over the last couple of weeks.  We have had a flood of enquiries at all levels of the market with tenants scrambling to secure their chosen property and paying by credit card ahead of signing the tenancy agreement in order to stave off the competition. "It's like the bull market of 2008" says Lucy Morton of W.A. Ellis. 

"Bidding wars have become the norm again in prime central London" says Morton, head of Lettings at the West End firm.  "Properties newly launched on to the market are being viewed and secured within hours of coming on.  Last Wednesday we showed a two bedroom property on Kings Road with five other prospective tenants viewing it at the same time.  Our letting was agreed within ten minutes of the viewing, the holding deposit was paid by credit card and five minutes later the landlord received other offers.   

"The serious tenant who knows that they are coming to London in September should do everything possible to secure a property before the beginning of the school holidays in July." advises the ex-President of ARLA.  "They can then go on holiday with the knowledge that they are settled when they return.  The next most savvy tenant is in the market place now and the disappointed ones will still be lying on the beach in blissful ignorance of the frenzy of activity taking place in London.

Those who start their search at the end of t he holidays are going to find it very difficult and will have to make significant compromises when they do arrive here as the stock levels are going to be frighteningly low again in September. 

Many tenants are staying put and paying more just to keep the property they are already in. "Our average renewal rent is currently 8% more than they were paying" says Mrs Morton. "Tenants are increasingly paying over the odds in order to be able to stay on.  A client recently decided to sell his property at the end of the current tenancy and the tenant managed to persuade him to grant him a further year by paying a 40% increase in rent.  With the Buy to Let mortgage market now lending again at an average of 60% loan to value, I would encourage investors to purchase as I anticipate the current average yield of circa 4% to increase, something that is way overdue.

Lucy Morton