Newsletter | January 2012 | Lettings market comment (Jan 2012)

We ended last year with a little concern about the Lettings market in Central London as enquiry levels were down during the last three months of 2011.  This was mainly due to fewer expats coming to work in the City due to the Eurozone crisis.  It would have been foolhardy for them to employ at the same rate that they had the previous year due to the economic instability, the Lettings market being an accurate barometer for the City.

It is true to say that we are anticipating that the demand from expats will be less this year but January has got off to a good start and we are realising that we are not so reliant on the City as there are so many other types of tenants in the marketplace.  One of the largest increases in tenant type is we, the British.  We now fully accept renting rather than buying for all sorts of reasons.  We ‘let to let’, ie rent out our homes in order to move for personal or location reasons, eg more space or to be near the right school, whilst keeping our own home as a pension or investment.  Often we cannot raise the funds for a second home or indeed secure it due to the lack of stock.  It is beneficial being both sides of the fence.  A well looked after tenant makes a good landlord – if his/her property is well managed whilst they are tenants, they will be responsible and diligent landlords in return.  We are noticing a trend of frustrated British purchasers renting in London and buying a weekend retreat in the country where there is more stock available to them.

With the average age of the first time buyer still at almost 40, this in turn has brought down the average age of tenants in London.  These would-be first time buyer tenants have to compete against the high net worth international students who flock to London and keep the one and two bedroom properties the most active and buoyant in the marketplace.  There has been less activity at the very top end of the market but we anticipate that this will pick up in the spring and summer when families tend to move and come to London. 

The investment activity and demand in Central London is the strongest that I have ever known it to be in almost 30 years.  This is partly due to the international demand as London is seen as such a safe haven but also due to the increasing nervousness about keeping money in the bank or putting it into pensions.  It is abundantly clear that bricks and mortar are the safer bet.  Not only are these investors long term but tenants are too.  Voids are at their lowest and the average tenancy in prime Central London has increased dramatically as tenants stay for longer.  With yields hovering around 4%, this long term investment is less risky and gives a higher return than money in the bank.

The Olympic let is certainly the buzz word in the marketplace as we enter 2012.  We are receiving daily more and more enquiries from both landlords and tenants and this no doubt will increase over the coming months.  It remains to be seen logistically how we are all going to cope when the landlords let, the tenants arrive along with the crowds and the athletes with London coming to a complete standstill and as we struggle to carry on with our day jobs.  Putting all that aside, this brings very exciting times for us all and I wish you all a very happy 2012.