Renting has always played second fiddle to owning your own London home. While homeownership in the Capital will always be a world-wide aspiration, the London Let has made remarkable waves this last year. What’s all the fuss?
Everybody wants to own a home in London. And it’s not just because London property is highly regarded as a bulletproof investment, insulated by its global appeal. It’s also simply that owning a property in London is the classic ambition. Your very own Victorian terraced home (or Edwardian or Georgian) with room for the whole family and a suntrap back garden, down a leafy street and just near enough to the Underground for an easy commute. Sounds like paradise.
However, it seems we’ve expanded our horizons in 2022, and some new goals have been sweeping the nation.
The Modern London Let
We’ve probably all heard this word too many times in the past few years, but what happened in the London lettings market last year was well-and-truly unprecedented. We’ve been researching and analysing this market for decades, and even with our inimitable database, we saw rent prices and demand break records last year right across the industry.
In our London Report, we explained it like this, “Rental markets tend to self-correct far more quickly than sales markets…rental growth lines up with earnings growth, unless there is a significant reduction in housing stock to rent or a substantial source of new demand…”
2022 began with very strong renter demand, and it just kept climbing as the year progressed. Many more tenants sought renewals and longer tenancy agreements. We’ve also seen a swell in international students and corporate lets and a massive amount of interest from movers into the Big Smoke. Amid all this increased demand, the ever-limited London rental supply fell significantly, rousing remarkable levels of competition for each new flat on the market.
Our report went on to say, “Over the past year or two, that long-term, steady relationship between earnings and rental growth has been interrupted and rents have spiralled, reaching an annual growth rate of 19%.” Consequently, London lettings, which have always been viewed as a steppingstone to buying, have become a priority in their own right.
The new London market
The London lettings market seems to have a whole new attitude for 2023. Contrary to the swift and sudden peaks of 2022, 2023 should see a steadier rise in demand. Foxtons research indicates that the market will grow this year, but that the availability of new lettings stock will be redistributed throughout the year instead of concentrated around a summer peak. So, if renters can’t rely on a flood of new properties in the summer, they’ll need to start earlier, factor in more time to find their new home and be ready to act as soon as they find a property they like.
Renting: the new normal
With big headlines looming – the energy crisis, the war in Ukraine, the Mini Budget – more would-be first-time buyers have remained renters. According to our London Report, 55% of all tenants coming to the end of their tenancy chose to stay in their rental home in 2022. Also, 24% of renters signed 2+ year leases in 2022, up from 12% in 2019.
To nurture this strong relationship with tenants, there seems to be a trend towards professionalisation by private landlords and service from Build to Rent. A good tenant is worth their weight in gold, and keeping a good tenant in their property will provide landlords with peace of mind through the coming year – or two years, or three. Our average tenancy length has risen from 16 months last year (which was already high) to 20 months.
Renting with Private Landlords
In the last five or six years, the expectations around a London let have changed dramatically. The service is expected to be quicker and more transparent than ever before. Foxtons Property Management has had an influx of landlords requesting our fully managed service.
Our landlords find that having a professional team manage the leasing, maintenance, compliance, inspections and relisting of their property saves them time and effort. Especially when it comes to things like the complexities around London's ever-changing legislation, or urgent maintenance requests from tenants during a Landlord's workday, Property Management provides the peace of mind that their asset is protected.
Our property management protects the valuable relationship with tenants through fast, thorough and effective service as well as highly trained experts to keep a professional, empathetic line of communication open throughout the tenancy.
Renting through Build to Rent
Build to Rent developments are completely designed around their residents’ needs, featuring assets and amenities that cater to the “Generation Rent” lifestyle. The buildings and services are designed this way in order to promote renewals and longer tenancies, and in recent years, Build to Rent developers have gotten exceptionally good at understanding which benefits their residents truly value. Gyms, pools and saunas, cinema rooms and rooftop bars, coordinated residents’ events, concierge and 24/7 on-site management…residents move in and never want to leave.
