At least 5,500 properties owned by the London councils are unoccupied, more than 3,000 of which have been vacant for three months or more, revealed Evening Standard last week. Here are some numbers:

Now Ealing council is planning to launch a scheme that gives young people the opportunity to jump the queue for affordable housing if they agree to learn renovation skills. The council will identify privately owned properties which have been left unoccupied for more than three months.

Sounds like a full time job!

The latest FindaProperty.com rental index for October 2009 is here!

From the London market overview:

• The SUPPLY in London rental market has been falling by 18.8% from the August peak and 13.2% in the last month.

• STOCK LEVELS remain 30% higher than a year ago. The stock of flats dropped by almost a fifth (-19.2%) since the peak in August, including 13.8% in the last month. The number of houses on the market, meanwhile, has dropped by 16.8% since the August peak and almost 10% over the last month.

• RENTS increased by 1.6% in October to £1,636 pcm, the second consecutive monthly rise in line with falling stock levels.

• The annual rate of decline in rental values went to -4.6% from -5.7% in September.

• YIELDS have gone up slightly from 4.47% last month to 4.5% in October.

• There are now 4 boroughs showing POSITIVE ANNUAL GROWTH, with rents higher than they were a year ago – in Havering, Kensington & Chelsea, Enfield and Barking & Dagenham. Demand for properties in the most desirable, affluent boroughs is driving the wider London recovery, with the five most expensive boroughs (Kensington & Chelsea, City of Westminster, Camden, Hammersmith & Fulham and Barnet) all recording positive month-on-month growth.

• The boroughs which recorded the LARGEST PRICE FALLS in October are at the mid to lower end of the market (Lambeth, Sutton, Redbridge, Lewisham and Merton).

Download the full report here: FindaProperty.com Rental Index October 2009

The decline in rents that we have seen since the middle of last year appears to be ending, declares Knight Frank in their latest residential market review. It will take some time for the level of rental stock to return to normal levels but a lot of ‘forced’ landlords have begun to slowly shift properties back into the sales market.

- The fall in central London rents continued into the early summer – Knight Frank’s prime London rental index confirms that for the three month period to the end of June 2009 rents fell by 1.9% on average. On an annual basis in June rents were 19.3% lower than they were in 2008.

- It has been more expensive properties that have borne the brunt of the rental falls – with rents on properties costing up to £500 per week falling only 11.3% over the year to June,
and those costing over £1,500 per week falling by 27.3% over the same period.

- Most central London sub-markets have been hit by falling rents. Chelsea and Kensington have been particularly affected with declines of over 26% in each area. Only the City – with a rental fall of just 9.7% over the past year – has been partially protected from the downturn. The City benefits from a high proportion of lower priced properties which have been better performers during the downturn.

- The autumn market is likely to be characterised by hard negotiations for landlords – but significant rental reductions from here are unlikely. The traditional busy September market could see the beginning of rental increases in some areas – as demand from new employees and their families comes into the market.

Click here to download the latest research from Knight Frank.

Property portal FindaProperty.com has just published their new monthly index of residential letting prices.

Flood of Flats Hits the Capital’s Rental Market

- London continues to underperform the country as a whole, with steady declines in both asking rents and yields over the past 12 months.

- Rents have fallen by 6.0% or £102 since August 2008, while yields have declined from 5.09% to 4.49% over the same period.

- Declines in rents and yields are largely attributable to the oversupply of properties available to rent. Stock levels rose by 50% between August 2008 and August 2009, and the number of properties on the London rental market has increased for ten consecutive months (since October 2008) as homeowners have advertised properties for rent rather than attempting to sell them in a tough sales market.

- The London rental market differs from the rest of the country. It consists predominantly of flats, which account for 84% of rental property available on FindaProperty.com. By way of contrast, in the national rental market, houses outnumber flats by more than two to one. The Survey of English Housing indicates that 66% of renters in London live in flats, suggesting that there is an oversupply of flats on the market relative to houses. Indeed, the supply of flats on the rental market has risen by 18% over the past six months, while houses are up just 7.3%, based on

- Asking rents for flats have fallen by 7.4% or £111 pcm over the past year, from £1,509 to £1,398 pcm; while the decline of rents on houses was, in percentage terms, less than half that – £79 or 3.5%, with a fall from £2,270 to £2,191 between August 2008 and August 2009.

- The relative scarcity of houses to rent in the capital makes them more sought after, especially for families and other people who need or prefer a home with an independent entrance and a garden. Many people who in other circumstances would have purchased a house have been discouraged by lack of confidence or prevented by lack of finance, or may be waiting for prices to stabilise. In the meantime they rent.

- The excess supply of flats could also be exacerbated by the pick-up in activity in the sales market, with some existing renters taking the plunge as owner occupiers and vacating their flats.

- The borough-wide picture is mixed. The boroughs showing the largest declines are Greenwich, Haringey, Brent, Merton and Lewisham, all with a monthly decline of over 2%.

Download the full report here - FindaProperty.com Rental Index August 2009

Fresh out of the oven – the new FindaProperty.com Rental Index for July 2009 has just been delivered.

Rents rise in all regions month-on-month, except for Scotland (-0.1%) and London (-0.9%), which buck the national trend.

- London is currently behind the national trend, with rental stock still rising (+2% between June and July) and rents falling (-0.9%). This is likely to be caused by falling demand, as the London market is impacted strongly by lower employment levels and a sharp fall in the number of new graduates seeking homes to rent, and rising supply, as landlords letting to students find their properties vacated in early summer at the end of the academic year.

- A surprising 3.3% jump in flat asking prices in the London sales market this month could entice flat landlords to move across and attempt to sell in the next couple of months, which may halt the relentless increase in flat rental stock.

London boroughs – the best & worst performers, Findaproperty.com Rental Index July 2009

- In terms of boroughs, there continues to be significant volatility in rents, although more expensive boroughs for rentals seem to be faring somewhat better than the cheapest ones. The majority of the top five saw rises this month (Kensington & Chelsea, Hammersmith & Fulham, and Richmond upon Thames), while all the five cheapest boroughs (including Barking & Dagenham, Bexley and Waltham Forest) saw falling rents.

Download the full report here > FindaProperty.com Rental Index July 2009

The new FindaProperty.com Rental Index for May 2009 was published last week.

Key points from the London market overview:

ASKING RENTS

- Asking rents increased in 23 of the 33 London Boroughs, suggesting that the London market is beginning to show some early signs of recovery.

- Overall the London market saw a month-on-month rise in asking rents of 0.4%, from £1,623 pcm in April 2009 to £1,630 pcm in May 2009. In addition, of the 10 boroughs that showed month-on-month falls in asking rents, all of the declines were modest with the largest fall being in the City of London, where rents fell by only 1.3%.

- Despite the recent growth in rental prices, the London market is still far from making a full recovery. Overall, rental prices have fallen by an average of 6.6% year-on-year between May 2008 and May 2009, with only the three boroughs of Barking & Dagenham, Hillingdon and Greenwich showing positive annual growth.

London Boroughs Overview, excerpt from Findaproperty.com May 2009 Rental Index Report.

RENTAL YIELD

- The average rental yield across the Capital stands at 4.74%; however, investors are continuing to receive better returns in London’s outer boroughs, especially in areas which are undergoing extensive regeneration. Average yields in excess of 6% can be found in Barking & Dagenham (6.44%) and Newham (6.52%), two areas which have seen some of the largest yield growth over the past year, with rates of return rising by 1.11 percentage points and 0.34 percentage points respectively.

- It continues to be the prime areas of central London such as Kensington & Chelsea and Westminster as well as affluent areas of south west London, including Richmond-upon-Thames and Wandsworth, which have the lowest rental yields. Kensington & Chelsea has the only sub 4% average yield in London at 3.92%, followed closely by the City of Westminster with a yield of only 4.12%. In addition, rental yields in some prime areas are falling with Westminster recording a 0.72 percentage point fall in the yield over the past twelve months.

Download the full report here > FindaProperty.com Rental Index May 2009

The competitive environment for landlords means that rents fell again in the first 3 months of 2009, by 7.4%, and are now 18.2% below their March 2008 peak, and 3.6% below the previous market peak in September 2001, states the latest London residential property market review by estate agent Knight Frank.

The current review takes a closer look at the corporate market lettings:

- In terms of the types of properties in demand from corporate tenants, the general rules remain unchanged – neutral properties, wooden floors rather than carpets, open plan living, close to good travel hubs, and, for the higher price brackets, porterage and concierge services.

- While there is a bias towards new-build properties from most clients – US and European tenants often prefer a traditional house or flat for the “London experience”.

- What has changed through the recession has been the demand from corporate tenants for the structure of tenancies. There is a desire to achieve flexibility and certainty – with six month break clauses required alongside clauses providing the tenant with an option to renew for a second and even third year.

Download Knight Frank’s London Residential Review Summer 2009.

*Knightsbridge

The latest Primelocation.com Prime Index for May 2009 shows that prime London lettings market remains a tenants’ market thanks to an excess of supply over demand.

Stock levels were up by 125% compared to April 2008, and prices fell by 18.29% year-on-year and by 1.46% over the month.

Andrew Smith, Primelocation.com’s Head of Research, comments: “Rental values remain depressed due to high supply levels, which continued to rise over the month. It remains to be seen whether the gradual improvements in the sales market will encourage ‘reluctant landlords’ to cut their losses and return to the sales market. The recently announced plans to introduce licensing for landlords may hasten that process as homeowners baulk at the increased administrative burden governing the rentals market.”

Prime London Lettings

- Weekly rental values have dropped for the 13th successive month since March 2008 and are now 1.46% lower than March 2009.
- For the third successive month, all five prime London regions have seen a decline in weekly rentals. With stock levels increasing by 125% compared to this time
last year, all the regions in London are hit hard, especially South West London (-1.41%) and Islington, City & Docklands (-2.46%).
- Annualised price changes continue to fall and are now at their lowest since January 2005, with weekly rents 18.29% lower than this time last year.

Jump to Primelocation.com Prime Index May 2009

The new FindaProperty.com Rental Index for April 2009 is now available!

What is happening in London residential rental market in April 2009?

- Majority of London boroughs continue to see both month-on-month and year-on-year falls in asking rents, with the inner boroughs and the south west London corridor amongst the most severely affected.

- Double digit declines are not unusual, with the largest year-on-year falls seen in Islington (-15.9%), Tower Hamlets (-14.0%), Merton (-12.7%), Hammersmith and Fulham (-12.5%) and Wandsworth (-12.2%).

- Areas that have performed best are situated in the outer London boroughs, with a particular concentration in Eastern and South Eastern locations.

- Some boroughs have even managed to achieve year-on-year rental growth, including Greenwich (4%), Hillingdon (1.2%) and Barking & Dagenham (0.8%).

*Excerpt from London Boroughs Overview

Highest average rental asking price in April 2009 – Kensington & Chelsea £3,176 (monthly change -0,2%).
Lowest average rental asking price in April 2009 – Barking & Dagenham £911 (monthly change +1,3%).

Download the latest FindaProperty.com Rental Index.

On the right hand side of our blog we have a few links to websites we recommend London renters to use for rental property search. These sites deserve to be on the pedestal for several reasons but also just because they contain more rental listings than others.

We thought it would be a good idea to write down the number of property listings each portal has in one specific London postcode, and then come back to see where all of them stand after a few months.

Number of residential property ads in SW3 (Chelsea and Brompton) on more popular UK property portals:

PROPERTIES
IN SW3             PORTAL
1916                 Findaproperty.com
1874                 Primelocation.com
1340                 Globrix
1076                 Nestoria
1066                 TrovitHomes
1000***             Rightmove
645                   Zoomf
625                   DotHomes
502                   ThinkProperty.com
342                   HotProperty.co.uk
225                   Look4aProperty.co.uk
209                   Zoopla
202                   Fish4Homes
200****              PropertyFinder.co.uk
41                     TheLettingSite.co.uk
30                     PropertyIndex.com
?*                      PropertyLive.co.uk
?**                     Enormo
13.4.2009

*Estate agents’ owned website does not allow searching for properties from only one specific postcode (they suggest we look at all the offers within 1 mile radius as well).

**Postcode search not available.

***The site says 1000+ but lists exactly 1000 properties.

****The site says 200+ results but lists exactly 200 properties.

The new FindaProperty.com Rental Index for March 2009 is now available!

A quick summary of what the report says about the London lettings market: 

- The average asking rent in London fell by -1.1% in March 2009 to £1,650 pcm compared with £1,669 pcm in February 2009. Average asking rents are also down by -6.9% over the year.

- Boroughs that are traditionally popular with City workers continue to suffer significant falls in asking rents with the City of London, Tower Hamlets (incorporating Canary Wharf) and Kensington & Chelsea being particularly hard hit on a year-on-year basis.

- Largest monthly fall in rents was seen in Hammersmith & Fulham, where asking rents fell by -3.7% in March 2009 to £2,190 pcm.

- The only London borough to see rental growth on both a month-on-month and year-on-year basis was Haringey, which saw rental prices rise by 1.4% in March 2009 and by 1.9% on the same month last year.

 
London boroughs overview – click on the table to enlarge the image.
  

Rental yields:

- Prime central areas such as Kensington & Chelsea, Westminster and the City of London as well as affluent west London boroughs such as Wandsworth and Richmond-upon-Thames, are seeing prices holding better and as a result rental yields are typically below 4.5%. In the case of Kensington & Chelsea the rental yield is as low as 3.97%.

- The highest available rental yields are currently achievable in Newham (6.90%), Barking and Dagenham (6.06%) Greenwich (5.99%) Waltham Forest (5.69%) and Hackney (5.63%).

- Many of the areas that are offering the most attractive rental yields are also undergoing regeneration, making them particularly attractive to investors who can benefit from strong short-term income and the potential for long-term capital growth.

Download the latest FindaProperty.com Rental Index.

Change in demand and instructions % balance for London, UK.

New RICS lettings survey for January 2009 was released just last week. Read the summary here and download the report here (*pdf).

Market comments from chartered surveyors:

Mark Wilson MRICS, Globe Apartments (London):

Good activity at the lower end and deals are being done where landlords adjust their rental expectation downwards. We can’t see any reason why this trend will not continue.

Lynn Hilton, Cluttons (London):

Rents are falling ‐ demand is from tenants trading down not from new job seekers relocating to London. 

Edward Reeve BSc FRICS, Edward Reeve (Pimlico):

Rents for the more expensive flats are still falling but at a much slower rate and since Christmas there is evidence that they are stabilising as lettings are easier to achieve. There is also evidence of slight increase in rents of lower priced flats since the start of the New Year and many more applicants and viewings.

Michael Chouler FRICS, Best Gapp & Cassells (Belgravia):

No corporate market (down massively) Rent reductions ‐ not only at renewal time. Few people moving generally.

Nik Madan, John D Wood & Co. (Kensington):

There is a great deal of oversupply on the rentals market as many would be vendors come to ”mothball” their properties for a year or two by renting them out so as to ride out the recessionary sales market. As a result, these reluctant landlords have helped cause rents, and therefore yields, to fall. Nonetheless, transaction volumes remain high. There is some evidence of foreign companies looking to secure long term rentals with premium lets to take advantage of the weak pound.

James Gubbins, Dauntons (Westminster): 

Property oversupply, tenant budgets down result in a falling rental market although activity remains intense. The competition is such that landlords are forced to upgrade or reduce rents to compete with the increasing numbers of properties that are available to rent.

Kevin Ryan, Carter Jonas (Westminster):

We are finally starting to see a reduction in stock as applicants are renting again. Rental prices have dropped approximately 25% in the last six months and now at seemingly more affordable prices, the market is seeing activity. 

Ben Temple, Temples (Wandsworth):

The supply of property has increased by 61% over the last quarter. As a result, with tenant enquiries down by 23% rentals have fallen by about 10%. We expect that the rental market will stabilise in the spring with an increase in tenant demand but rental growth is not on the horizon. 

Robert Schaverien, Chancellors/ Anscombe & Ringland (Barnet)

Rental values in Finchley have fallen by 10 % plus on one ‐ two bedroom flats. Renewals have either been the same or at rental reductions. The larger properties have fall in some cases by 20 ‐ 30 % due to the lack of the corporate market.

Asking prices in prime London lettings market fell for the 11th successive month and were 13.72% lower than this time last year, reports property portal Primelocation.com.

• Annualised price changes continue to fall and are now at their lowest since January 2005, with weekly rents 13.72% lower than this time last year.

• Weekly rental values have dropped for the eleventh successive month since March and are now 2.15% lower than January 2009. Landlords must continue to offer reduced rates in order to entice prospective tenants.

• For the second successive month, all five prime London regions have seen a decline in weekly rentals. With stock levels increasing by 97% compared to this time last year, all the regions in London are hit hard, especially Central London (-2.42%). North West London (-2.35%) and Islington, City & Docklands (-2.30%).

Download Primelocation.com Prime Index March 2009 (*pdf)

Further job cuts in the City over the remainder of 2008 and 2009 mean we expect rental values in central London to fall by -7% from their peak, predicts the latest Savills‘ market report.

- The rental market in prime central London suffered at the hands of the weakened employment outlook in the City which led to a reduced demand for rental property. For the first time since 2003, rental growth across prime central London was negative, falling by -1.4% by Q3.

- So far this year and particularly more recently, activity has been strongest in the lower price bands with applicants who are employed in the financial sector choosing to rent. High levels of demand coupled with additional supply from buyers unable to sell their properties, is likely to keep rental growth in check over the coming months.

- The most vulnerable part of the market and where the downturn in corporate tenants has been most acutely felt is in the super-prime sector. This is the
sector where corporate tenants, often relocatees in the financial sector, have enjoyed big employer-paid subsidies in the past but are now suffering cutbacks.
Rents in this sector fell by -2.6% during the third quarter.

- Properties at the top end of the market (the ultraprime sector) recorded a rental rise in value over the third quarter of 0.7%, taking annual growth to 4.1%.
Demand remains strong within this price band although tenants are becoming increasingly price-sensitive.

*The rental market falls into three tiers; mid-prime (average £1,250 per week), super-prime (average £3,000 per week) and ultra-prime (average £4,000
per week).

Download the report HERE.

The key points for the new RICS UK Residential Lettings Survey Q3 2008:

- Growth in new instructions outpace growth in tenant demand;
- Rents fall for the first time since April 2003 while rental expectations drop to the lowest level on record;
- Gross yields rise as house price falls outpace rental falls.

Here’s are some comments from the London market experts:

Christopher Ames MRICS, Best Gapp & Cassells [Belgravia]
“I would like to give you figures, but haven’t let anything. Asking prices have come down, but there is
nobody looking.”

Mrs Caroline Appleby MRICS, John G Dean [Balham]
“As tenants have a larger choice of properties, it is important that the property is in good condition and is
offered at the correct rental level. Anything that is in a tired condition seems to be rejected.”

Richard Beltran Esq, Chancellors [St John's Wood]
“Fewer applicants are registering in the area, which is a direct result of the financial instability in the
economy: many of our applicants work in banking and choose St John’s Wood because of its closeness to Canary Wharf by tube. Demand for properties over £1000 p/w is slower, but still very busy between £300-£700 p/w”

James Gubbins MRICS, Dauntons [Pimlico/Westminster]
“Renters are not looking to spend as much. Supply is outstripping demand. Rents are reducing as vendors turn to Rentals.”

Benjamin Sloane, Chancellors [Highgate Village]
“There is very little activity on properties renting above £600 per week.”

Tim Henson FRICS, Clarke Hillyer [Walthamstow]
“Typically more owners are choosing to let out their properties as opposed to selling. A lot of people have over-mortgaged and can’t afford to rent out their properties for less than that figure. In the last month or so the market has deadened dramatically, even for lettings, making it harder to achieve the market prices.”

Jeremy Leaf FRICS, Jeremy Leaf & Co [East Finchley]
“Supply and demand for rented flats and houses increased, particularly in the last few months in response
to weakness in the sales market. However, concerns about unemployment have meant that rents have softened and some contracts have been cancelled or not been renewed recently. We expect supply and demand to be more in balance over the coming months as lender rates, as well as mortgage lending criteria, ease.”

Edward Reeve BSc FRICS, Edward Reeve [Pimlico]
“Rents for one & two bedroom flats in the £1350-£2000 per month range have increased but it is apparent there is less demand for higher priced flats over £2600 per month and rents are falling. One recent letting at £2,900 per month was achieved after a 2 month void. The previous letting was £3,445 per month.”

Ben Temple BSc MRICS, Temples (Clapham) Limited [Clapham]
“Summer seemed to have come early this year and then tailed off. We were busier than normal in the early summer months and then quieter in September and October. We have seen an increase in the supply of property, vacancy rates have increased, and rents have started to fall, particularly for larger properties.”

Mark Wilson MRICS, Globe Apartments [London]
“Batten down the hatches. Landlords should expect rents to continue to fall as tenants’ effective demand reduces. Added supply will add to the problem.”