London is once again showing that, as a market, it does its own thing.
House prices are falling across almost all the UK, apart from London. Rents are rising across much of the UK – but in central London, they are going down.
The reasons? Tenant affordability and an oversupply of rental properties, according to property consultants Cluttons.
The firm says that London landlords should consider a reduction of 15-20% off current asking rents.
The firm warns that price-conscious tenants, many of whom can no longer rely on the cushion of a corporate let, are renegotiating hard on new agreements or at renewal and are using the greater choice of rental property as a bargaining tool.
Lynn Hilton, partner for residential lettings at Cluttons, said: “Affordability is now central to the performance of London’s rental market. Landlords cannot achieve the rents they were getting 12 months ago and must now be far more realistic with rent reductions of around 15-20% in order to secure a let.
“Despite a small turnaround in rents during the third quarter, our evidence shows that rents have begun retreating once more, highlighting the need for landlords to be realistic in their approach and expectations.
“Sensible landlords need to accept these reductions to minimise void periods. Greater choice across central London is no doubt adding to tenants’ bargaining power.”
Another agent, Marsh & Parsons, said central London rents have dropped 2.8% this year, while WA Ellis said that the spate of job cuts in the City had had an adverse effect.