Life as a London renter has been a fairly miserable vantage point from which to watch the phenomenon of soaring house prices in the years after the financial crisis.
Yes, it’s enriching to try local living in several of the capital’s quirky and charming “villages”, but the price of switching from being a Notting Hillbilly to a hip Hoxtonite has been high.
Prime central London (PCL) rents leapt by 5.1 per cent in the five years from the first quarter of 2011 to 2016, while real wages stagnated. The elusive dream of homeownership sailed further into the horizon with PCL home prices jumping by 37 per cent over the period.
Yet the tide began to turn this time a year ago with the looming imposition of an extra three per cent stamp duty on second homes as of April 2016, prompting buy-to-let investors to accelerate house purchases in the first quarter of that year, before deciding to dump them onto the market.
Brexit-induced paralysis, owing to the uncertainty generated by last June’s referendum, has contributed to the ongoing stand-off between buyers (who felt too unsure to cough up exorbitant asking prices) and sellers (who anticipated appetites would return and refused to drop the prices of their properties).
Over this period, rising supply has met with shrinking demand as wary tenants continue to sit on their hands until more clarity emerges on Brexit. PCL is front-and-centre of the affected areas with a large contingent of financial services employees dwelling within its exclusive boundaries.
Central London could be hit by an exodus of City institutions, many of which are drawing up contingency plans to partially up sticks to the continent or to send thousands of their employees sprawling between rival cities such as Frankfurt and Paris, which stand ready to embrace displaced bankers.
The Brexit effect on European nationals is already being shown, with data from the Office of National Statistics (ONS) calling the most recent quarterly immigration figures for EU citizens “statistically significantly lower” and the emigration figures “statistically significantly higher.”
Recent months have brought further good news for renters who deserve some feasting after years of famine.
Despite the fickle government dropping several policy ideas over the past year, it has stuck with its move to ban agents from collecting letting fees from tenants and remains keen on making a concerted drive towards boosting private rented sector accommodation. This latter initiative should likely improve the quality and availability of rental offerings going forward.
Agents are warning that the letting fee ban will force landlords to charge tenants more for rent to make up for additional fees, but in reality this stunt could be tricky for the landlords to pull off.
According to data from property information collators LonRes, new PCL rental instructions have jumped by 10 per cent in the past year, further boosting the supply mountain. Meanwhile, more than half of PCL rental properties have reduced their prices before they were let in the past year while the average rental price is down nearly three per cent.
London renters, go out and get it while it’s not hot.