Lettings Market Update - June 2012

July 02 2012

Dear Landlords and Colleagues 

As many of you are based overseas, I’ll just start by saying that I hope your ‘summer’ is proving to be just that – as the dwellers of this fair isle aren’t having much luck!

In April’s Update I alluded to the fact that that we might be experiencing a shift in the lettings market, with more stock becoming available. Throughout May and June this has remained the case, but as yet it does not appear to have had an overly adverse effect on achievable rents. Whilst it is fair to say that the properties are taking a little longer to rent, rent levels themselves remain strong. We certainly experienced a fall in tenant demand over the Easter period, but this is just a seasonal norm as much of London takes a holiday over the period. However, this seasonal ‘depression’ was perhaps made more acute by the extended bank holiday period over the Jubilee Weekend. Over the last few weeks tenant demand has returned to what we would term ‘normal’ for the time of year.

I have spoken with a number of you over the last few days with regards to why stock levels may be higher, but in complete honesty, at this moment in time, we cannot put our finger on the precise reason why – its rather difficult to comment on a phenomenon or trend whilst you are in the midst of it. An analysis from Experian showed that there was a 6.34% increase in the number of properties advertised to rent between January and March 2012, compared with the same period last year. However, the period we are referring to is April-June. It will be interesting to see whether they see a much larger increase in this period. Experian also commented that in that same January-March period, the number of properties for sale dropped by 2.5%. 

It’s worth bearing in mind that any data from a company such as Experian, or anything you are likely to read in the press, is most normally based upon national statistics. Regional variation is rarely considered, and actually London itself could be spliced and chopped up into many, many different areas of performance. To a degree, the point I am going on to make would apply in any market, falling, rising, or stagnating: valuations must be based upon recent, relevant comparable evidence. It could conceivably be the case that these higher stock levels could be in part due to Landlords hearing/reading of a lettings ‘boom’ and rushing out to buy or add to an investment portfolio. I think we’re all guilty, to a degree, of believing everything that we read…

Finally, just a word or two on the upcoming Olympics from a lettings perspective – It’s a bit of a white elephant! Two years ago now the press seized onto the ‘fact’ that there were not enough hotel rooms to accommodate all visitors over the Olympic period. What they had failed to account for is the huge amount of serviced apartment accommodation we have in London, and the key fact that many of those with tickets would just be day trippers, or would stay with family or friends. In an article published in The Telegraph just today, one inbound tour operator actually reports London visitor numbers being 35% DOWN. Many would normally visit London over the summer are actually staying away – put off by huge accommodation prices and a belief that London will just be too busy.  http://www.telegraph.co.uk/travel/travelnews/9358654/London-2012-Olympic-hotel-prices-fall-by-25-per-cent.html . The result being that the cash cow the Olympics was predicted to be for private Landlords…. isn’t.

So, an Update of mixed messages – more stock, taking slightly longer to rent, but rents remaining broadly stable.

Back with you in August.

Yours sincerely

Christian Thomas MARLA