It is predicted that political and economic uncertainty will lead to a further drop in London housing transactions as home-owners wait to list their properties for sale. Instead, many of these properties are appearing on the rental market, buoying up the capital’s stock levels and providing tenants with a much stronger negotiating position than they have previously enjoyed.
In fact, a surge in the number of properties available to let in prime central London is already having an impact on rental prices. Property data company LonRes reported that increased stock levels have meant that tenants are now in a better position to negotiate on price. Its lettings index recorded a fall in prices of 4.9% compared to the third quarter last year.
International Agent Knight Frank has also admitted that London tenants now have the upper hand when negotiating terms: "Higher stock levels are the result of uncertainty over the short-term prospects for price growth in the sales market, which has led more vendors to let their properties.”
According to Knight Frank, average rents are down 4.9% on a year ago and the number of new properties to let on the market has risen by 29%. However, demand remains robust for properties priced over £5,000 per week as well as those below £1,500 per week, the firm says.
Whilst many agents expect a period of stagnant growth in UK rental prices, international Estate Agent Savills forecast that average rents will rise by a total of 19% between 2017 and 2021, and 24.5% in London over the same period.
For the first time, Savills has also published rental growth forecasts for UK regional cities.
Bristol, Birmingham and Manchester are all expected to continue to draw highly skilled and well paid employees requiring good quality rental stock. Savills five year rental growth forecasts for these cities are:
• Bristol 27.5%
• Birmingham 17%
• Manchester 17%