Time to move? Rents in London and the South East hit an unseasonal low as number of rental homes increases
Autumn is usually one of the busiest times of year in the rental market with an annual surge in tenants looking for a home around the start of the university year and the end of summer.
However, the Rightmove rental trends research for July to September 2017 found the average asking rent for a two-bedroom home in London dropped 3.3 per cent compared to the same period in 2016, to £1,985 per month.
This is the lowest level for asking rents at this time of year since 2013.
The report also found that properties were taking longer to let, with rental homes standing empty for five per cent longer than a year ago.
There were some areas within London where rents rose year-on-year. Rents rose 10.1 per cent in Battersea, to £2,204; in Elephant and Castle they were up 6.6 per cent, to £1,841. Both areas are the focus of massive regeneration and significant levels of new home building.
“New build stock on the rental market has definitely contributed to the strong rise in rents in Battersea and Elephant and Castle, as new builds always command a premium,” said Mr Mitchell.
“However, rents in older properties are also going up, perhaps benefitting from the new builds surrounding them, which has lifted the overall market rate.”
Top five highest rental growth areas in London
|Area||Average asking rent Q3 2017||Annual change|
|Elephant and Castle||£1,841||6.6%|
Source: Rightmove Rental Trends Tracker, October 2017
THE NATIONAL PICTURE
National asking rents outside London also fell in the third quarter of the year, with a drop of 0.2 per cent – the first recorded drop at this time of year.
Rightmove said the national price drop was driven by falling prices in the South East, as a result of the changes to stamp duty on buy-to-let properties introduced last April. This led to a surge in sales to investors hoping to beat the surcharge deadline, increasing the number of rental homes available in the months that followed.
“Since last April’s second home stamp duty changes came in the supply of new rental properties in the South East has been steadily increasing, up 5.5 per cent on this time last year,” said Rightmove’s head of lettings, Sam Mitchell.
“Agents are reporting that some investors looking for better yields are shifting their focus from London to instead buy in the surrounding counties of Surrey, Berkshire and Buckinghamshire. The increase in stock in the South East has led to softening in rents in some areas where there is less competition among tenants, but they are holding up in key commuter areas where tenant demand is strong.”
Rightmove found that in London, the number of rental properties increased by 26 per cent as a result of the stamp duty changes, leading to the current fall in rents.
Mr Mitchell said that as investors were replaced by first-time buyers in London, rental supply in the capital is likely to constrict, pushing rents up.
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