Lonres is an agent-only website which collates and analyzes data on the Central London property market based on the feedback and information provided by its subscribers. According to their most recent quarterly newsletter, the London’s lettings market has been quieter than expected over the last three months. In the first quarter of 2016, the number of the tenancies agreed in Prime Central London fell by 18% compared to same time last year, whilst the rest of London and its surrounding areas have also shown a decrease in new lets agreed. An increase in renewals is contributing to this decrease in the number of new tenancies agreed which is most likely down to the political uncertainty caused by the EU referendum, due in June, and the subsequent possible unravelling of the market following a Leave vote (please refer to our EU referendum blog)., Agents have seen a significant drop in the number of new applicants and viewings, particularly on the corporate relocation front whilst The City awaits the results of the referendum. Properties at the upper end of the lettings market have attracted fewer applicants and viewings. However, on a positive note properties under £750 per week have shown an increase in demand, with one and two bedroom properties having performed strongly.
More generally, the lowered levels of activity reflect the amount of competing supply across the Prime London market, suggested by the level of investment buying activity seen in new build sectors and second homes. In the first two months of 2016, the number of mortgages completed for buy to let purchases was 26% higher than the same two months of 2015. The majority of the buying activity was concentrated in the market between £500k and £1m. This suggests better rental performance of these properties and higher income yield returns available.
Going forward, the outlook for rental growth over 2016 remains unknown and restrained due to the uncertainty caused by the EU referendum. It is becoming difficult to predict how the market will progress over the rest of the year, however a recent survey by Lonres suggests that 29% of agents believe there will be a rise in achieved rents by the end of 2016, with only 3% expecting rents to increase 5% or more.