The south west London lettings market has performed well in the last year and levels of stock have increased by around 15% since 2012. Although rental yields are not as high as in previous years, offering an average of 5% in south west London, many investors are benefiting from strong capital growth and rising property values as a result of confidence in the sales market.
Because of the significant rises in property values, more tenants are now renting out of necessity, as purchasing a home of their own becomes increasingly unrealistic in today’s market. It therefore looks likely that we will continue to see growth in the number of tenants renting property in London in 2014.
As demand among tenants increases, we’re finding many, typically young professionals and couples, who are unable to afford the growing rental prices in traditionally popular areas of London. As a result, there is an overspill into areas further afield and we’ve seen evidence of less sought after areas doing particularly well. For example, in an area like Tooting, young professionals and families are attracted by the good transport links into the City as well as better value for money, and big developments like Fusion by Bellway Homes have been a catalyst for the area. In addition, because of the ripple effect caused by Tooting and the rising popularity in other areas, many of their neighbour’s perceptions are also altering. Streatham, for instance has seen an 85% increase in registered tenants in the last year.
Other areas in south west London also seeing a rise in appeal are Battersea Park and Clapham. The hugely popular Nine Elms development, located between Battersea Park and Vauxhall stations, will bring an additional 16,000 new homes and should have a major effect on the lettings market here in coming years. The extension of the Northern Line, which is set to be given Zone 1 status, will further increase its popularity.
Tenants appear to be looking for long term stability and on average, our tenancy lengths are 15% longer than in previous years. Factoring in incremental rental increases can be a very attractive option for both landlords and tenants and offers greater security to both. Tenants have shown a greater sense of urgency to secure the right property and as a result in 2013, we saw a 7% reduction in the time span between marketing a property and offer accepted.