The price is right
Make the most of rental reductions and trade up for a central London home. But be quick, says Anna White
As lockdown restrictions ease and restaurant terraces and pub gardens start to welcome drinkers and diners, some renters have the chance to trade up to the luxury neighbourhoods of central London, usually the preserve of the elite. This window of opportunity comes after rents in the capital’s most exclusive areas have fallen
17.8 per cent over the course of the pandemic.
The exodus of tenants from the capital during the early phase of the coronavirus outbreak has created a gaping supply-demand imbalance, according to a study by LonRes, forcing landlords to accept low offers.
In fact, 36 per cent of homes listed on Rightmove this month have had a rent reduction, compared with 20 per cent a year ago — with the biggest discounts in Zone 1.
“It should come as no surprise that the effective closure of offices, restaurants and theatres had a significant impact on levels of demand for rental property in prime (luxury) London.
“Demand from overseas students, office workers and visitors alike have all been curtailed by restrictions. This has been compounded by tenants who found a central London base was surplus to requirements,” says Marcus Dixon, head of research at LonRes.
A reversal of the Airbnb phenomenon has contributed, too, explains Rokstone’s head of lettings Olivia McSweeney. “With no tourists, we saw Airbnb hosts flip their one- and two-bedroom properties into rental homes which flooded the market,” she says.
WHERE TO FIND THE BIGGEST RENT REDUCTIONS
The largest discounts over the past year, according to Rightmove, are in Southwark, where rents have fallen 29 per cent since the onset of Covid-19 in March last year. Finsbury
(-24pc), Camden (-23pc), Whitechapel (-21pc) and Stockwell (-19pc) make up the top five areas by rental falls.
In the exclusive core of the capital the biggest drop in rent was in Knightsbridge (-19pc) and rents in Victoria are down 17 per cent. Deals can also be found in Notting Hill, where rents have fallen on average by 15 per cent and in Marylebone (-12pc).
Due to the regeneration of Church Street, there are plenty of rent reductions also on the residential roads that stretch from north Marylebone to Edgware Road, according to Rightmove.
NOTTING HILL
Diane Wrightson, head of operations at the Guardian, moved from a small basement flat in Bayswater this January to a pristine apartment in Notting Hill, which had been recently renovated.
Originally priced at £530 per week, Wrightson agreed a 22 per cent discount on her one-bedroom apartment in a white, converted townhouse on Pembridge Crescent and now pays £410 per week.
“It’s a steal and I wouldn’t have gone for it at the original price. The lettings agent thought my offer was too low but due to the global pandemic I thought it was worth a try,” says Wrightson.
“Rents in Notting Hill are generally outrageous but this flat has been redone to a really high spec with a super king-size bed. It feels like living in a hotel but you’re surrounded by your own things.”
Wrightson has rented in Brixton, too, but describes the south London hipster enclave as “high energy” and “hectic” and she was drawn back to the pace of life north of Hyde Park with its large green spaces.
“One-bedroom apartments in Notting Hill now start from around £300 per week/£1,300 per calendar month for something small right up to £1,350 per week for a four or five-bedroom house,” says Tom Whitehouse, a lettings manager at Marsh & Parsons.
“Notting Hill offers quality of life and a village feel,” he adds.
The apartment is one street away from the bustle of Portobello Road, with the original Farm Girl site, the popular brunch bar Daylesford Organic and restaurant Ottolenghi. It’s a short walk from Hyde Park, as well.
Marsh & Parsons’ Graeme Young has seen rent falls of up to 20 per cent in areas such as Westbourne Grove, although he thinks the window for deals might be closing.
“We agreed a rent for a selfemployed tenant on Westbourne Park Road. It would normally cost £595 per week but he got it for £400 per week. That’s a 32 per cent reduction,” he adds.
“This trend has been going on for a few months but we are now seeing activity pick up again, especially among corporate tenants as we get closer to the end of government repatriations,” he says.
RENTS TO REBOUND AS OFFICES REOPEN
However, the window to secure a discount could be small and there are early signs that the anti-urban sentiment whipped up during the acute phase of the Covid-19 crisis is on the turn.
From January to March, the number of homes let across all luxury pockets of London has risen by 14 per cent — that’s a nine per cent increase in the exclusive boroughs of Belgravia, Knightsbridge, Mayfair and Kensington and Chelsea — and a 15 per cent jump on the fringe, which includes the suburbs of Wimbledon, Hampstead and Richmond. Although the LonRes data concentrates on the high-end neighbourhoods, known as prime London, this increase is reflective of rental demand across the city.
“With the roadmap out of lockdown in place, we expect demand to increase as workers return to their offices and London opens to visitors once more. As this demand for rental properties increases and stock is absorbed, we would expect to see rents begin to rise, too,” says Dixon.
Alex Knapp, chief investment officer at the international developer Hines, believes a gradual drift back to office life is starting. “In a crisis people over-correct,” he says, referring to the flight out of London.
“While working will change forever it will not go fully online. Although being remote has been surprisingly good for productivity, it is not good for culture. People are tiring of Zoom and there’s that fear of missing out.” Knapp expects to see people returning to offices from September.
This is backed up by Gary Sacks, head of the lettings and sales agent Life Residential. “There’s a mini surge of rental enquiries after every announcement from the Government or every date that the restrictions are eased, including this week as amenities reopen,” he says. “These people are looking to rent now in preparation for physically going back to work after the summer.”
NEW RENTAL PRIORITIES
Due to a shift in property priorities following the lockdowns, rents will rise fastest on homes with private gardens in close proximity to parkland. Whereas rents on apartments with no balcony or garden may take longer to recover, explains Dixon.
With a growing desire to walk or cycle to work, where possible, being close to green space rather than proximity to the Tube station may also impact rents.
There are also question marks hanging over the type of property that people are willing to rent. A lingering fear of contagion means couples may opt to live alone, where affordable, rather than share with others which could drive demand for the over-supplied stock of one
bedroom apartments and studios. “Properties that are tired, with old carpets and where the decor constantly reminds you that other people have lived here, are being left behind,” says McSweeney. “People now want homes that are recently redecorated and feel really clean.”