How much rent should you be charging?
With over 10 million people living in London, the capital and its rental market is as desirable as ever. The high demand for affordable places to live means that a competitive rate and a property in good condition, more or less guarantees interested tenants, but knowing when to adjust the rent can still be tough.
Commenting on the overall perception of the London rental market, LiFE Residential’s Area Lettings Manager, Jack Spellman, said:
“What we see a lot in the press is sweeping headlines that claim rents are either going up or going down. However, these stats typically encompass London as a whole, instead of focusing on the micro-markets. Every market is unique and what happens in Canary Wharf is going to differ to what happens in West London, which will differ again to the market in Nine Elms. In-depth knowledge of the individual micro-markets is key.”
What were the average rents in 2017?
In order to gauge just how much rent you should be charging this year, it’s important to know the recent average figures throughout London. To help you get a grasp on the kind of figures you should be charging, below are figures for 6 popular areas in London which still have great investment opportunities.
|Rent per Month by area||Studio||1 Bedroom||2 Bedrooms||3 Bedrooms|
What factors can alter the rental price of a property?
Whether it’s to do with the property, location or the wider market, there are plenty of factors that influence the amount of rent you should charge.
Throughout the 2017/18 fiscal year, over 130 billion journeys were taken on London’s underground and the buses helped over 224 billion on London buses. These huge numbers show just how important public transport is to keeping London running.
One of the biggest things people look for are properties that provide easy access to transport systems. So, if you have a property that is only 10 minutes away from a well-connected tube station, you can expect to be able to charge more rent than properties further afield.
While London’s property market has seen plenty of growth over the past 5-10 years, wages throughout the capital have not appeared to grow at the same rate. People are struggling to buy their own property and this is leading to a constant increase in demand for rental opportunities.
However, this means that there is plenty of opportunity for landlords throughout London to offer affordable accommodation and see strong returns on their property investments.
The majority of demand across London is for furnished properties. People arrive here from all corners of the glove and being able to pitch up, find somewhere to rent and move straight in is usually very important. That’s not to say that there isn’t unfurnished demand, but certainly much less and over the medium term you are likely to see bigger void periods on an unfurnished property as the pool of potential interested tenants is less.
What to expect throughout 2018?
Whilst this year takes us another step closer to Brexit and with it an element of uncertainty, from a lettings perspective it appears that similar to 2017 the demand is still very strong.
With government legislation aimed at curbing landlord investment, it seems there may be less buy-to-let activity in the capital. There is a strong argument to suggest that if this happens, there could be a constriction of supply in the future, which would lead to an increase in rents. However, caution must be thrown to the wind here as rents are already high and very possibly close to the maximum of what most Londoners can afford.
Advice to landlords
Overall, if you are a professional landlord with a commitment to maintaining a good quality property, have a medium term outlook (3-5 years) and are realistic on the price you can achieve, then the London property market still offers some very exciting and fruitful investment opportunities.
Partnering up with an honest, qualified and transparent agent who has intimate knowledge of the property market where your property is located, will be able to make the property work its hardest for you.
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