I recently joined a very interesting LonRes briefing that looked over the year that was 2020, and into the foreseeable future for 2021. It was pretty depressing on the rentals front, and in PCL at least, landlords are going to have to work a lot harder for their rent for a while…
It was a bit of a bleak year for Lettings last year to be honest, with this usually stable sector experiencing little movement between quarters, except due to predictable seasonality.
Everything started very positively in early 2020, with a lack of stock bumping up rents, but by late 2020, following a year of Covid-19, the situation had reversed, with a high increase in levels of stock availability adversely impacting rent and causing an increase in void periods (which averaged 66 days by year end).
In London, the low to mid markets were the worst sectors to be hit with the pandemic, with more stock coming on and rents dropping considerably due to London-based students (both domestic and international) being homebound, city workers vacating their pied-a-terres and families making the move to more rural or suburban locations. Just a little further out of the centre became increasingly attractive, combined with reducing cost commitments.
Over the course of the year, landlords had begun accepting discounts of around 10% (marketing price vs actual rent price achieved). This is a big hit.
However, on the positive side of things (and there is always a positive), the Super Prime (PCL) and Prime Country markets boomed as wealthy families sought more space – with both London and country locations benefitting from this trend.
Consequently, while Q4 is traditionally the slowest quarter of the lettings season, this was the one quarter that experienced an uptick as people started to move around a bit again (before this latest lockdown of course!). Unfortunately, it wasn’t enough to plug the gap that had been accruing throughout the year from Q2, and total transactions ended on an all time low.
So what’s in store for lettings in 2021?
Well, let’s face it, we’re still experiencing very challenging times and if 2020 has taught us anything at all, it’s that you just never know what is lurking around the corner.
The fact is that there is a lot of stock out there, playing to the hands of a tenant led market with Bloomberg recently reporting thousands of flats across the capital lying empty.
This means there is high competition to get your property let, so it’s going to be a rocky ride for a while, except perhaps for the Prime / Super Prime markets that generally seem to manage to weather the storm.
What’s clear is that for the foreseeable it is going to be very important for landlords to be focused, flexible and realistic in order to minimise voids and rent loss.
Make your rental property stand out
- Be realistic with price – it’s a tenant’s market right now and receiving lower rent is better than no rent at all.
- Focus on what people are after: location, versatility, connectivity, workspace, outdoor space and plan your property accordingly.
- Consider incentivising your prospective tenants – what could you offer them (short or long term) to get them to rent your property over someone else’s? Rent free periods, complimentary wifi or bills included are often well received.
- Most importantly, don’t panic…! It’s easier said than done, but if you’re sensible, realistic and flexible and can hang on in there, you will win in the end.
In Central London, things are going to be different for sure, and while there is a general sense of cautious optimism in terms of the roll out of vaccines, it will take time for things to return to normal.
People are having to re-think their lifestyle, accommodation and location. Until we can operate freely, we are likely to hit a bit of a wall with the impact of the lower market rippling upwards and it taking some time to rent out the empty stock.
It is likely to be uncertain for many for some time, but in times of uncertainty, renting is always a very good option…
Feature image: Home-Designing.com