A Changing Market For Property Rental In London

Posted 18 January 2021 by Lizzie Leigh

Andrew Walker of Carter Jonas explains the effect of the last 12 months on the capital's rental market...

Andrew Walker, who heads up Carter Jonas’s portfolio letting and management department, talks about the rental market in the capital…

Can you tell us a bit about your role at Carter Jonas?

I act as the key contact and consultant for our portfolio clients, who range from estates, pension funds, charities, companies and individuals; all of whom own large portfolios, varying in size from 10 to 1,000 properties. For some, we provide a letting-only service, but for most, we provide our full rent collection and management service for entire portfolios. My role is to grow and nurture this side of the business.

Have you noticed a change in what tenants are looking for in a property this year, with more people working from home and spending a lot more time in their rental properties?

Several new trends have emerged post-lockdown. Statistically, we have seen a shift in demand for tenants wanting houses with gardens and outdoor space. We know from looking at our May – October 2020 figures that tenants are ten times more likely to want outside space compared with the same period last year and 45% specified they wanted a house compared with 31% in 2019.

Families are naturally motivated by space and there has been a surge in rental demand for two- and three-bedroom houses in smaller villages and more scenic locations, which pre-Covid may have been overlooked. This demand means that stock is moving more quickly than ever – there’s rarely time for second viewings and in most cases, landlords are able to secure above guide price for family homes on first viewings.

New builds, and specifically those that are build to rent (BTR), are having their moment because they offer families and couples generous extra bedroom, living and garden spaces. Towns like Oxford and Cambridge (where Carter Jonas has office presence) are enjoying a buoyant rental market because of their lifestyle offering and links to London and Birmingham, and rents remain affordable there for young families and couples.

BTR landlords provide security and certain quality checks, in a time where the private buy-to-let landlord market is shrinking due to various tax changes. Additionally, the surge of Londoners looking to move out of London and other big cities is making these properties very popular.

There are large estate landlords who have more character/historic stock who are also upping their game with benefits such as high-speed broadband and wellbeing incentives.

We see news about declining rents in London since the start of the pandemic, is this really the case?

There is no doubt that we are in a period of oversupply in Prime Central London, which is reducing rents in some areas, where corporate rentals have declined, and lack of overseas travel has slowed the market, especially the usual influx of students in August and September.

We are hopeful that some of our most popular ‘London villages’ such as Marylebone, Chelsea, Notting Hill and Barnes will see demand returning as renters look for stability in those communities and a desire to be culturally connected.

What are the main benefits of renting through an estate or BTR-type landlord, as opposed to a single buy-to-let landlord?

Most of the estates or BTR clients we represent aim to provide a consistent level of quality, in terms of service and with their properties. Due to the scale of their portfolios, they have a rolling programme of upgrades, so the properties are kept in very good condition. Renters feel secure because there is no risk of a landlord wishing to sell.

The good news for BTR tenants is that landlords are very focused on compliance and safety, they are used to dealing with multiple properties and want to instil best practice.

Many of the larger estate landlords are able to offer perks such as gym concessions, free Wi-Fi, or concierge services in their blocks; do you offer similar incentives to your tenants?

Many of the PCL estate landlords put a huge amount of effort into creating a community for their tenants, so this might include a loyalty card or special discounts for local shops, gyms and businesses. The Howard de Walden Estate has begun rolling out fibre optic broadband across their portfolio and include this in the rent.

As the urban BTR model continues to grow, I believe we will see other large landlords continuing to think of creative ways to compete with those schemes that offer extra amenities under one roof.

Has the amount of legislation in the area of property management increased in recent years?

It’s true that the changes in legislation have been challenging for landlords and their agents to keep up with. Currently on our agenda is electrical safety and upgrades needed to remain compliant and the changes to EPC bands, which will need to meet C band by 2025, for all private rented homes.

Do you foresee more legislation in the private rental sector heading your way soon?

Yes, based on past experience. Clearly the health and safety of tenants is paramount and there is more of a microscope on this than ever before, not least post-Grenfell.

What would be your top tips for tenants looking to rent a property in cities?

My top tips would be to consider connectivity and community. Due to the current trend for people looking to live in the country, there may be a unique opportunity to secure an apartment or townhouse with an extra bedroom or outside space that might not have been affordable this time last year.

Also consider whether you really need a garden, if you have fantastic parkland and garden squares nearby to explore? In London, for example, if this isn’t so high on the agenda, then locations like South Kensington and Marylebone might be ideal as they have a real village feel whilst being very well connected to the West End and beyond.

And finally, what are Carter Jonas’s plans for 2021 in portfolio letting and management?

Our work in letting & managing new homes in the Home Counties for our pension fund client has shown that there is a huge demand for quality family homes outside of the major cities. Many of the BTR funds are starting to shift focus to more suburban locations. We feel that our office network and experience fit perfectly with what we are calling ‘suburban BTR’.

 

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