Estate agent Fitz-Gibbons has just published the new Richmond Magazine where Jane Wheeler, Manager of Fitz-Gibbon Richmond, surveys the lettings scene:

The local lettings market is vibrant right now, with demand outstripping supply across the board. As uncertainty continues in the sales market, lettings is being fuelled by the discerning corporate market – international tenants seeking superior homes near London, as well as local people who are renting for longer periods.

At Fitz-Gibbon Richmond, we’re seeing not only strong offers, but also multiple offers placed on the same property time and again. Fortunately, most tenants are being flexible in terms of their demands – and, in a landlord’s market, that’s vitally important for those wishing to secure a property. In addition, tenants should ensure that they come to viewings fully prepared and able to act quickly.

One-bedroom properties are currently achieving between £1,300 and £1,500 per calendar month, whilst two-bedroom homes, with parking and gardens, can generate up to £2,300pcm.

For three-bedroom houses, expect valuations between £1,900 and £3,500pcm. As for homes with four or more bedrooms, they can achieve between £4,000 and £10,000, depending on their location and specification. There are always exceptions to these rules, however, and the property market determines rental values for outstanding properties.

Another key point is that, in the current climate, many homes that we would expect to remarket are not becoming available, as our tenants are choosing to renew their tenancy agreements.

Renewal rates currently mirror the retail price index or above. And this renewals trend is a reflection of two things: Firstly, the volumes of locals waiting to re-enter the sales market; and secondly, the stronger corporate market, with tenants residing in the area for longer periods.

Richmond’s transport links to London, Heathrow and the M4 make it ideally suited to the corporate market and, as a lettings specialist, Fitz-Gibbon naturally attracts both large corporations and leading relocation agents.

Read also Fitz-Gibbons Property and Lettings e-zine.

Queens Gardens in Bayswater W2

Knight Frank has released the Prime London Lettings Index for April 2011:

- Prime London rents rose 0.4% in April, representing their 20th consecutive monthly rise. The latest monthly rise contributes to an annual growth rate of 16.3%.

- Rents in central London are at a record high, up 25% since their low point in June 2009 and marginally exceeding the previous peak reached in March 2008 by 0.2%.

- Strong rental growth has outpaced capital value growth over the past year, and has pulled income yields higher, with prime central London gross yields hitting an average of 3.8% in April, up from 3.3% in June last year.

“With rents now marginally above their March 2008 peak level we still see scope for 5% to 10% rises in rents during 2011,” predicts Liam Bailey, Head of Knight Frank Residential Research.

Read the full report HERE.

“I really can’t understand where all the stock’s gone!” Peter Rollings, Chief Executive of London Estate Agents Marsh & Parsons, says it like it is.

Macclesfield House, London EC1. April 2011.

Letting agent Benham & Reeves reports of a severe shortage of properties for prospective tenants in London.

“Summer has come early to London in every sense – the sun is out and the rental market is ultra-hot thanks to a unique combination of four factors” explains Anita Mehra, Managing Director of Benham and Reeves Residential Lettings.

“Firstly, property remains very attractive to overseas investors because of the exchange rate, which makes many homes effectively 20 per cent cheaper now than in 2006″ says Anita, who has just returned from several property exhibitions in Hong Kong, Singapore and Kuala Lumpur.

“Secondly, the City – on which much of the Capital’s prime rental market depends – is in good health. Experian, a business consultancy, predicts London’s financial and business services sector will grow 2.8% per annum over the next five years” she says. The result is that many overseas financial services experts are coming to the UK for short periods and become the professional tenants who so many landlords want to attract.

Thirdly, there are growing numbers of international students in London – there are now 285,000, some 25% more than just two years ago, and academic experts say there will be a predicted 47,000 student-bed shortfall by 2016 as the number of incomers grows well beyond the construction of purpose-built accommodation.

Finally, falling levels of new house-building and continued mortgage restrictions, especially for first time and young professional buyers, mean the demand for London homes – to buy and to rent – look likely to outstrip supply for many years to come.

Annual lettings activity in West London, from Spring issue of London Portrait by estate agent Marsh & Parsons.

Estate agent Knight Frank‘s London Lettings Index Q4 2010 shows that Central London residential rents increased a whopping 16% in 2010!

Here are the headlines with Liam Bailey’s comments:

- Central London residential rents rose a further 2.2% in the final quarter of 2010.

- This rise means that rents have rose by 16% over 2010 as a whole and by 19% since their low point reached in mid 2009 when the market was suffering from significant oversupply.

- Rents are now 5% below the peak level they hit in March 2008 before the impact of the credit crunch was fully reflected in the market.

- Rents in the £1,500 per week segment saw a rise of 21% during 2010, whereas the £500 to £1,500 per week bracket rose by 12.3% over the same period.

- The strongest areas in central London were Knightsbridge and Mayfair – each with annual rental growth in 2010 of above 20%.

Liam Bailey, Knight Frank’s head of residential research comments: “The main narrative in the London rental market for the last 18 months has been thin supply meeting strong demand, and this was how the year ended.

“The volume of available rental properties across the year was 20% lower than in 2009, and – even more strikingly – down by 36% compared to 2008. Set against this reduced supply was the fact that the volume of prospective tenants fell only marginally (by 1%) compared to 2009, but actually rose by 10% compared to 2008.

“Why has the rental market seen such demand from tenants? Two reasons stand out. Firstly employment conditions in central London are much healthier than they were in 2009. Morgan McKinley, the City recruiter, noted that the number of new positions advertised in the central London financial and business services sector rose by 9% in November 2010 compared to November 2009.

“Secondly, in addition to the strength of London’s employment market – the fact that the sales market is still struggling to create stable growth in the number of deals means that many prospective buyers are still locked out of owner-occupation and have to consider rental as the alternative. While central London sales are outperforming the UK market, even there sales volumes in 2010 were 36% lower than in 2007.

“With landlord investments delivering 3.5% yields, together with capital growth of 10.3% in 2010, we should expect more investment buyers to be drawn into the market – indeed, there has been a steady growth of demand for property from investors over the past 18 months. But outside of the new-build sector there are few opportunities for new entrants to convert their interest into purchases.

“The level of rents in London points to the ongoing structural imbalance in London’s housing stock, with limited choice pushing rents close to record levels. Whereas housing costs for owners on variable rate mortgages have reduced by 50% and even more since 2008 due to ultra-low interest rates, for tenants they are only lower by 5% from their March 2008 peak.”

Following the reports that the rental stocks have dried up in London we ran a quick search online to find out how many flats and houses do London letting agents each currently have on their books.

We found that Foxtons is leading with 1690 properties, which is more than twice as much as Chesterton Humberts has with 811 rentals. Winkworth holds the third place with 805 properties to let in London.

1. Foxtons 1690
2. Chesterton Humberts 811
3. Winkworth 805
4. Knight Frank  624
5. Hamptons International 552
6. Marsh & Parsons 521
7. Ludlow Thompson 381
8. Chard  274
9. John D Wood 272
10. Benham & Reeves 270

Foxtons is reportedly spending £3m a year on their client database, which, despite the good performance, does sound plain crazy.

Douglas & Gordon Lettings Barometer August 2010

August 2010 was the best month ever for new rental business in estate agent Douglas & Gordon’s 52 year history. Continued economic uncertainty, restricted mortgage finance and less price growth stability has led to a stronger rental mentality in London. The days of eveyone thinking it is ssensible to get onto the property ladder are gone, and renting for a longer term and later in life has become the norm.

Via: Homesandtravel.co.uk

US bank employees are among the rise in corporate tenants making a timely return to the market, reports estate agent Cluttons. Many locations across prime Central London, including Kensington, Chelsea, Holland Park and Wapping, have supposedly been seeing an increase in tenants relocating for business. According to the estate agent, traditionally the high percentage of residential property in these parts of the capital was occupied by corporate tenants, but the recession impacted heavily on the number of business relocations. Now Cluttons is recording a 35% rise in corporate lets this summer.

Demand by tenant type.

A lack of supply is pushing rents higher, says the latest RICS Lettings Survey.

Download RICS Residential Lettings Survey Q1 2010

London market comments from the local property professionals:

James Gubbins MRICS
Dauntons in Pimlico, Westminster
- The market has been somewhat static up until recently: now improving in line with seasonal expectations.

Ben Temple MRICS
Temples (Clapham) Limited in Clapham, Wandsworth
- More landlords are now selling their properties. The picture is very mixed with some good rental levels being achieved but in some cases rents have continued to fall. Tenants are still negotiating and there seems to be enough choice for them to go elsewhere if they believe a rental is too high. We expect this to change but economic uncertainty may constrain rental growth.

Craig Newell BSc MRICS MCIArb
Craig Sheehan in West Kensington
- Acute shortage of rental property. Many landlords selling. Will have an effect on prices (upwards) in the near future.

Edward Reeve BSc
Edward Reeve in Pimlico
- Market very steady.

Nik Madan
John D Wood & Co. (R&A) Ltd in Kensington
- There is a clear shortage of stock on the lettings market in London and the South East. As a result, rents (and therefore yields) are rising. It is likely that this potential increase in returns will serve to attract investors back to the lettings market, particularly with a weak sterling making investment in the UK very attractive indeed to overseas investors.

Nicola Mukerrins
Cluttons in Bayswater
- Demand is certainly outstripping supply. We have many families looking with decent budgets but very little to show them. All local agents are experiencing the same shortage which in turn is resulting in agents overvaluing to get the instruction. Very frustrating!!

Jeremy Leaf FRICS
Jeremy Leaf & Co. in East Finchley
- Shortage of good quality 1 & 2 bedroom flats – especially if including outside space – as well as houses suitable for sharers both within 1/4 mile of station is pushing up rents. There are some signs too of aspiring first time buyers leaving the rental sector and trying to purchase though most are still being deterred by strict lending criteria and high deposits required by lenders.

Mark Wilson MRICS
Globe Apartments in London.
- Tenants continue to renew at a level we can never remember being so high. If owner occupiers are trapped so too is some of the private letting sector. Empty flats continue to let well and we are urgently in need of instructions.

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