Increasing Supply In Some Areas Creates Downward Price Pressure – London Rentals

We’ve had around ten offers so far this week with a common theme – around 5-10% below asking price, tenants increasingly pushing to secure both flats and houses to rent at, or even slightly below, last year's prices. The facts of the matter are simple; they are seeing a lot more property and working out the market implications for themselves. Most tenants are city high fliers who are very familiar with the workings of supply and demand.

Typical is a one bed flat in Earls Court under offer last week at £310 per week to a city banker (analyst). A year ago 90% of tenants would have pushed and paid the extra £15. The landlord refused the offer, holding out for at least the £325 he got last year. Despite our, and several other agents, efforts (and plenty of viewings), he still hasn't seen £325 per week. Similarly, in Pimlico we had £550 per week from another city trader on a two bedroom flat, let last year at £575 per week. The owners refused; the applicant signed up on a near identical property around the corner. A year ago he wouldn't have nescessarily had a choice - incidentally a week later and the landlord has now reduced the asking price to get £550. We've just agreed re-let on a one bedroom flat on Homestead Road, Fulham at exactly the same price as last year.

Other examples of this trend include an offer of £435 per week on a two bedroom flat on St Stephens Gardens, Notting Hill at £450 per week to move within 48 hours. The previous rent on the property was £420 per week, but the landlord rejected the offer in the pursuit of an extra £5 - £10; that was over four weeks ago - the price has now officially been reduced to £435 per week. We've just agreed £670 per week on another three bedroom flat in Notting Hill that we had £700 per week on the table for six weeks ago - another agent had "advised" the landlord that they could get at least £700 per week rent. They didn't.

Of course many landlords are receptive to a small decrease on asking price, if the "deal" is right (great tenant profile, fast mover). We've today agreed £410 per week on a £450 per week asking price in Holland Park, W11. Identical to last year's figure, and a move in date within a week.

There are more properties coming on the rental market than we’re used to seeing, but not across the board. Small pied-a-terres are in short supply, as are ultra smart “pads” from £450 per week to as much as £2500 per week. These properties are attracting multiple, competing offers, with prices staying very firm.

It's middle range property, much of it new to the rental market that is creating this choice. Over fifty per cent of our instructions over the past month have been new "virgin" properties - on the lettings market for the first time. Our advice to landlords with a long term rental offer on the table is to be realistic with their expectations. There are tenants out there with cheque books open looking to rent, but they've more options than a year ago.