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Tenants enjoy new buying power in London

Wednesday, 25 February 2009 12:34 PM

The oversupply of rental property has caused rents to fall by an average of 15 per cent, according to Cluttons.

The residential agency firm said tenants in secure jobs were seizing the opportunity to trade up the lettings ladder, securing a better property for a lower price.

Increased supply from homeowners choosing to let rather than sell has offset the balance of supply/demand in the letting market; which has spelt good news for tenants who are able to 'shop around' for a better property.

Cluttons has found tenants are now undertaking an average of 12 viewings before committing to a property, compared with just four a year ago.

Lynn Hilton, partner for residential lettings at Cluttons, said: "London's tenants are enjoying the greatest choice of rental property for years, combined with cheaper rents and greater negotiating power. The savviest among them are making multiple offers on properties and then choosing the best deal, while jittery landlords, keen to keep their properties tenanted, are agreeing deals.

"Lower value property is performing well, however, as tenants concerned about their financial future opt to downsize and reduce their outgoings. There is strong demand for one and two-bedroom properties in areas such as Wapping, Tower Bridge and South Kensington/Chelsea, in the region of £350 - £500 per week."

In addition, increasing unemployment in the capital is weighing heavily on demand for rental properties, combined with a reduction in budgets by tenants who are tightening their belts across the board, according to Cluttons.

Vincenzo Rampulla, public affairs officer for the National Association of Landlords (NLA) said: "The rental market in London is gaining strength as people turn to renting because of an inability to get mortgages. Demand is high. And prospective tenants do have more properties to choose from as some homeowners are deciding to become 'reluctant landlords' and rent out properties they can't sell in the present mortgage climate.

"Professional landlords, like our members, are in a better position than most because they can compete on quality. Tenants value professionalism and the standards that entails. Tenants renting from reluctant landlords run the risk of having a landlord who does not really know what they are doing.

"Our members have told us that their clear worry for 2009 is rent arrears - 71 per cent said that they expected rent arrears to rise in 2009. Landlords are doing more to ensure that prospective tenants are taking on a sustainable tenancy.

"You cannot guarantee that tenants will not get into financial difficulty during a recession. But the NLA provides services to all landlords to ensure that they can have as much confidence as possible in their new tenants in these difficult economic times."

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