London property market continues to flounder
By Will Leyland, 24 January 2017
Landlords in London have been reporting a fall in demand around the central London area and in other prime locations across the capital.
According to the report from the National Landlords Association (NLA), in the past 12 months the number of landlords in the region who said they were looking to invest in properties in the year ahead has fallen from 15 per cent to just five per cent, representing a staggering drop in confidence.
This indicates that Central London now has lower numbers of investors keen on buying more homes in the coming years than anywhere else in the UK. The figures are fairly shocking and concerning for those based in and around the capital, as the NLA is considered a good barometer for landlord and investor mood. The figures suggest that London-based buyers are looking to invest in other areas where yields are stronger.
Regional hotspots where there are more students and increasing business prospects, such as Manchester, Liverpool, Birmingham and Leeds, are delivering higher yields than traditional areas. London and its South East contemporaries are now struggling in comparison to the North West and the Midlands when looking at this data.
Other reasons cited for the lack of confidence include better transport links into London from the regions and more affordable housing becoming available in the surrounding areas. Put simply, tenants don’t have as much urgency to rent or live in the Central London zone when it is becoming easier and more convenient to live outside of the city.
There is also the issue that London is facing a reported brain drain as young professionals, graduates and young families flock to other areas of the country after being put off by the living and rental costs in the capital. The North, the North West and the Midlands are all seeing increased inward migration from the South East as tech innovation, job growth and strong economies mean that there is a stronger incentive to live in these regions than there used to be.
Many are interpreting this as a sign that the London market has topped out, with other figures reporting a staggering drop of almost 30 percentage points from 45% of landlords reporting an increase in tenant demand last year to just 17% now.
This comes off the back of announcements by the Prime Minister, Theresa May, that Britain will seek to leave the single market when it eventually enters negotiations to leave the European Union. This has huge implications for London whose professional community often rely heavily on EU co-operation.
The North and the Midlands in comparison are riding high on the announcement of £556 million worth of investment into infrastructure, housing and business projects as part of the government’s new industrial strategy. This has led many to believe that the balance between the North and the South of the country could finally be addressed.
If it were the case that house prices begin to draw closer together in both regions, then London based investors could be set to lose out heavily while those North of the capital enjoy huge profits.
For landlords in and around these areas it could be exciting times as tenant demand drives loftily upwards with demand from workers keen to get involved in the North’s revival.
Interested in the lettings and management service offered by Intus Lettings? Please click here for more information.
New data from Knight Frank indicates a healthy rental market in prime central London
New data reveals a lack of knowledge surrounding current deposit protection laws
It is important to be up to date with current legislation in the rental sector - are you aware of the latest regulations?
A new bill is set to pass through Parliament which will give tenants greater rights when it comes to hazardous homes
The tenancy deposit cap has been reduced to five weeks rent