London Residential Property Rental Market Watch – September 2018

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Rent Watch

Introduction

Welcome to the September 2018 volume of London Rent Watch; our data tracker of the residential lettings market in London, with a detailed view of the private rental sector in our six core market areas in South and West London – Chelsea, Hammersmith, Fulham, Clapham, Balham and Putney.

The objective is to keep landlords and tenants in these boroughs informed of the ongoing changes in private rental sector. At the end of each calendar month we publish live, up-to-date data on average rental values, broken down by property type and size.

Summary

The monthly variance in residential rental values from September to September 2018 comes against a backdrop of falling supply across the London region. Our sample of 59,549 properties was -13.4% lower than in the month of August.

This fall in supply has increased the mean average letting value in the capital month-on-month by +4.3%, whilst the median value increased 2.2%, suggesting that monthly growth has been fuelled more by the premium end of the market compared with low and mid market properties.

Contents

(click to jump)

London Rental Values >
Chelsea Residential Rental Values >
Hammersmith Residential Rental Values >
Fulham Residential Rental Values >
Clapham Residential Rental Values >
Balham Residential Rental Values >
Putney Residential Rental Values >
About the Data & Methodology >

 

London Rental Values

12 Month Variance

Rental values across London cooled once again in the last 12 months, with the ONS reporting an annual decrease of -0.3%, unchanged from the previous month. This is the largest annual contraction in values since September 2010, when the figure was -0.4%.

With letting values in Britain as a whole rising 0.9% in the same period, and the UK excluding the capital up 1.5%, London is once again the only region where annual rental values are falling.

One Month Variance

London as a whole saw the average asking rent increase from August to September, against a backdrop of falling supply. This was most prominent in the mean average, so growth in letting values has been greater for houses and apartments at the upper end of the market. Whilst one bedroom properties contracted slightly, monthly growth was stronger relative to the number of bedrooms beyond this.

Headline Rent Values in London – September 2018

SAMPLE SIZE: 59,549 properties (-13.4% monthly)

LONDON August 2018 September 2018 Monthly Change
Mean Average Rental Value £3,023 pcm £3,153 pcm +4.3%
Median Average Rental Value £1,950 pcm £1,993 pcm +2.2%

 

Rent Values by Bedrooms in London – September 2018

LONDON % of sample Mean  Average rent Monthly Change Median Average rent Monthly Change
One bedroom 27% £1,922 pcm -0.7% £1,550 pcm -2.0%
Two bedrooms 42% £2,777 pcm +1.2% £2,102 pcm 0%
Three bedrooms 20% £4,478 pcm +3.3% £2,825 pcm +2.6%
Four bedrooms 8% £5,281 pcm +2.4% £3,098 pcm +2.1%
Five bedrooms 3% £8,562 pcm +8% £5,070 pcm +12.7%

 

Rent Values by Property Type in London – September 2018

LONDON % of sample Mean  Average rent Monthly Change Median Average rent Monthly Change
Room 6% £750 pcm +0.6% £693 pcm -0.7%
Flat 92% £2,984 pcm +3.9% £1,993 pcm +2.2%
House 2% £4,922 pcm +4.1% £2,600 pcm 0%

 

 

Chelsea Residential Rental Values

SAMPLE SIZE: 4341 properties (-10% monthly)

One Month Variance

In Chelsea, a 10% fall in supply fuelled strong growth in asking rents, driven largely by one bedroom flats and single room lets, which together represented one quarter of the market. Larger properties posted slight falls in rental value over the month, particularly with four or more bedrooms, representing a cooling period following strong growth during August.

Overall, rental growth in Chelsea was seen in all market segments, with slightly higher growth rates nearer the premium end of the market.

Headline Rent Values in Chelsea – September 2018

CHELSEA August 2018 September 2018 Monthly Change
Mean Average Rental Value £6,119 pcm £6,463 pcm +5.6%
Median Average Rental Value £3,423 pcm £3,575 pcm +4.4%

 

Rent Values by Bedrooms in Chelsea  – September 2018

CHELSEA % of sample Mean  Average rent Monthly Change
One bedroom 24% £3,101 pcm +3.3%
Two bedrooms 47% £4,364 pcm -0.3%
Three bedrooms 21% £9,089 pcm -0.07%
Four bedrooms 5% £13,838 pcm -1.4%
Five bedrooms 3% £26,618 pcm -1.5%

 

Rent Values by Property Type in Chelsea  – September 2018

CHELSEA % of sample Mean  Average rent Monthly Change
Room 1% £1,036 pcm +4.5%
Flat 88% £5,317 pcm +5.5%
House 11% £15,513 pcm +2.9%

 

 

Hammersmith Residential Rental Values

SAMPLE SIZE: 2156 properties (-12.8% monthly)

One Month Variance

Following modest growth in August, Hammersmith rental values took a significant jump during August, posting double-digit mean average growth. Whilst growth was recorded across all property sizes; three, four and particularly five bedroom homes were the driving force behind the performance in this borough.

Accordingly, single room let values contracted slightly, whilst flats and houses both showed robust growth in values during the month.

Headline Rent Values in Hammersmith – September 2018

HAMMERSMITH August 2018 September 2018 Monthly Change
Mean Average Rental Value £3,117 pcm £3,467 pcm +11.2%
Median Average Rental Value £2,600 pcm £2,773 pcm +6.7%

 

Rent Values by Bedrooms in Hammersmith – September 2018

HAMMERSMITH % of sample Mean  Average rent Monthly Change
One bedroom 25% £2,038 pcm +0.9%
Two bedrooms 46% £3,120 pcm +0.2%
Three bedrooms 21%   £4,591 pcm +7.1%
Four bedrooms 3% £5,090 pcm +10.7%
Five bedrooms 4% £12,790 pcm +32.8%

 

Rent Values by Property Type in Hammersmith – September 2018

HAMMERSMITH % of sample Mean  Average rent Monthly Change
Room 3% £850 pcm -1.2%
Flat 90% £3,203 pcm +10.9%
House 7% £7,368 pcm +9%

 

Fulham Residential Rental Values

SAMPLE SIZE: 2175 properties (-18.7% monthly)

One Month Variance

Having remained flat during August, rental values in Fulham increased at a steady rate during September. This was more prominent in the low and mid-market segments, due in part to a fall in supply of almost one fifth.

All property types and sizes recorded growth with no single standout area, with the exception of single rooms which fell in value during the period.

Headline Rent Values in Fulham – September 2018

FULHAM August 2018 September 2018 Monthly Change
Mean Average Rental Value £3,094 pcm £3,210 pcm +3.7%
Median Average Rental Value £2,383 pcm £2,492 pcm +4.6%

 

Rent Values by Bedrooms in Fulham – September 2018

FULHAM % of sample Mean  Average rent Monthly Change
One bedroom 24% £2,016 pcm +1.8%
Two bedrooms 45% £2,867 pcm +2.7%
Three bedrooms 20% £4,263 pcm +4.1%
Four bedrooms 7% £5,883 pcm +0.4%
Five bedrooms 4% £8,373 pcm +2.7%

 

Rent Values by Property Type in Fulham – September 2018

FULHAM % of sample Mean  Average rent Monthly Change
Room 3% £886 pcm -4%
Flat 84% £2,752 pcm +3.3%
House 13% £6,707 pcm +2.6%

 

Clapham (Lambeth) Residential Rental Values

SAMPLE SIZE: 760 properties (-12.1% monthly)

One Month Variance

Clapham’s rental values fell from August to September, due mostly to decreases in asking rents for one and three bedroom flats, which together accounted for around 40% of the market.

All other property types and sizes posted growth, especially in single room lets, but neither this nor the relatively small drop in supply were able to offset the downward pressure from small flats.

Headline Rent Values in Clapham – September 2018

CLAPHAM August 2018 September 2018 Monthly Change
Mean Average Rental Value £2,183 pcm £2,112 pcm -3.2%
Median Average Rental Value £1,820 pcm £1,798 pcm -1.2%

 

Rent Values by Bedrooms in Clapham – September 2018

CLAPHAM % of sample Mean  Average rent Monthly Change
One bedroom 24% £1,513 pcm -3.5%
Two bedrooms 47% £1,975 pcm +0.2%
Three bedrooms 16% £2,480 pcm -0.7%
Four bedrooms 9% £3,657 pcm +1.9%
Five bedrooms 3% £4,727 pcm +0.3%

 

Rent Values by Property Type in Clapham – September 2018

CLAPHAM % of sample Mean  Average rent Monthly Change
Room 4% £743 pcm +4.9%
Flat 82% £1,937 pcm -1.4%
House 14% £3,719 pcm +1.3%

 

Balham (Wandsworth) Residential Rental Values

SAMPLE SIZE: 580 properties (-12.3% monthly)

One Month Variance

Rental values in Balham for September 2018 were mixed, resulting in a mostly unchanged environment overall. Single room lets decreased in price significantly, whilst three bedroom properties posted the strongest growth in asking rent. Coupled with the relatively low fall in supply compared with other boroughs, Balham’s rental market was seen as stable and unchanged during the month.

Headline Rent Values in Balham – September 2018

BALHAM August 2018 September 2018 Monthly Change
Mean Average Rental Value £2,228 pcm £2,233 pcm +0.2%
Median Average Rental Value £1,850 pcm £1,842 pcm -0.4%

 

Rent Values by Bedrooms in Balham – September 2018

BALHAM % of sample Mean  Average rent Monthly Change
One bedroom 26% £1,411 pcm +0.9%
Two bedrooms 39% £1,896 pcm -1.2%
Three bedrooms 16% £2,848 pcm +5.2%
Four bedrooms 11% £3,339 pcm +0.9%
Five bedrooms 7% £4,337 pcm -2.9%

 

Rent Values by Property Type in Balham – September 2018

BALHAM % of sample Mean  Average rent Monthly Change
Room 3% £691 pcm -7.2%
Flat 73% £1,795 pcm -0.9%
House 24% £3,754 pcm -0.1%

 

Putney (Wandsworth) Residential Rental Values

SAMPLE SIZE: 3018 properties (-25% monthly)

One Month Variance

The significance of a 25% drop in supply in Putney’s rental market during September yielded robust growth in rental values.

Two and three bedroom flats and houses, accounting for 65% of the market, posted stable and sustained growth rates. Meanwhile five bedroom properties, making up just 5% of the market, posted an extraordinary 48% increase in asking rents. Elsewhere, single room lets were largely unchanged in value over the month.

Headline Rent Values in Putney – September 2018

PUTNEY August 2018 September 2018 Monthly Change
Mean Average Rental Value £3,022 pcm £3,151 pcm +4.3%
Median Average Rental Value £2,350 pcm £2,383 pcm +1.5%

 

Rent Values by Bedrooms in Putney – September 2018

PUTNEY % of sample Mean  Average rent Monthly Change
One bedroom 22% £1,799 pcm -0.3%
Two bedrooms 45% £2,857 pcm +3.5%
Three bedrooms 20% £3,893 pcm +1.4%
Four bedrooms 8% £4,433 pcm -1.2%
Five bedrooms 5% £9,332 pcm +48%

 

Rent Values by Property Type in Putney – September 2018

PUTNEY % of sample Mean  Average rent Monthly Change
Room 3% £812 pcm 0%
Flat 83% £2,925 pcm +5.4%
House 14% £4,896 pcm +3.1%

 

About the Data & Methodology

Data Sourcing

The data in our Rent Watch tracker is a live to-the-minute snapshot of residential rental values, aggregated from the UK’s most comprehensive database of current asking rental values on home.co.uk. We collect the data for London as a whole, and for each of our six focus areas in South and West London – Chelsea, Hammersmith, Fulham, Clapham, Balham and Putney.

This month’s data was compiled on 28th September 2018.

Methodology

The data is first broken down by property type and by the number of bedrooms, with each of these groups expressed as a percentage of the sample size for each location.

The mean average rental value is calculated by dividing the sum of all rental values in the sample y the number of properties in that sample.

The median average rental value is calculated by arranging every rental value in the sample from smallest to largest, and selecting the single value for which 50% of the values are above and 50% are below.

The monthly variance is expressed as a percentage increase or decrease from the data we collected in the previous month, to show a monthly change in rental values within the given sample.

Increasing the Profitability of your Rental Property; Adding Value & Reducing Costs

Maximising financial return is a key target for any investment, property being no exception. With an economic backdrop of slowing London rent growth, many Landlords are seeking now more than ever to maximise rental income, to ensure the profitability of their property investments.

Simply increasing the rent is not suitable for some landlords, especially in the present climate, in which this could in fact lead to a longer vacancy rate and lower returns over the year. Below we highlight the key tactics for buy-to-let investors to maintain their rental yield during a slow market, and increase it in a buoyant one.how to maximise rental income from your residential property

1. Minimise your Costs

Profitability is as much about cost reduction as it is about increasing income. It’s always worthwhile to start by taking control of the costs associated with your property investment, firstly by making a simple account of all relevant monthly outgoings, so that you know which of the following areas you should prioritise.

Find 0% Commission

Typically anywhere from ten to fifteen percent of your rental income, managing agent commission rates account for a significant monthly cost on your property’s balance sheet. Agents offering services without commission started with the likes of online estate agents, and were previously only available to sellers.

With us, however, landlords can now receive a full managing agency service for their residential lettings at 0% monthly commission. This means that for every £1000 of rental income, that’s another £100-£150 every month back onto the bottom line.

Find out more about 0% commission.

Limit your vacancy period/void period/Let your property quickly

Every day that your property is vacant between tenants represents missed revenue. Unless you have essential maintenance or upgrades planned, having an empty non-income-generating asset is a frustration for many landlords. After all, your monthly costs do not stop mounting up simply because you’re between tenants.

Fortunately there are a number of tactics available to landlords for ensuring their investment works for them throughout the year:

  1. Guarantee your rent. We offer guaranteed rental income at the valuation we provide – no matter if your property is empty.
  2. Cap your vacancy period. We guarantee to let your property within 21 days of bringing it to the market. We’re so confident we’ll do so, that we’ll pay you £1000 if we don’t. No questions asked. Find out more.
  3. Target the right tenants. It’s hard to know how long a prospective tenant plans to stay in your property, but long-term lets are always preferable when seeking to minimise void periods. On the whole, we know that certain groups lay their roots for longer than others. This is why we only target professional tenants with our thorough referencing and background checks.
  4. Start planning early. Ask your tenants a couple of months in advance of their tenancy renewal if they have any plans to move on. Whilst some may not know for sure, this allows you to gauge the possibility of needing to find their replacement ahead of time. If they’re planning to leave, engage your letting agent as early as possible to minimise the vacancy.

Guarantee your Rent

No matter how hard you try to ensure your tenants are reliable and come with good references, anybody can find themselves caught short on the rent once in a while. Whilst this income usually comes through in the end, the lack of consistency and cash flow can be a frustration for many buy-to-let investors.

That’s why we guarantee the rent at appraisal value for our landlord clients, every month without fail. This way we can guarantee your cash flow, and await the outstanding amount on our own terms.

Find the best deal

Insurance products and mortgages are unavoidable costs for all responsible landlords, but they are by no means fixed overheads. Financial products are by their very nature highly competitive, so more often than not you can find a better deal by shopping around.

Comparison websites are a great place to start when looking for a better deal from your insurance or mortgage provider, but it’s worth remembering that they don’t all show the same offers, so using a few different sites is always worthwhile.

It should also be noted that some insurance providers will offer their best rates when you go directly to them, but these are often positioned at the premium end of the market to begin with.

Stay above board

Industries are changing at an ever increasing rate, even the typically slow-to-innovate property sector. Technological advancements, as well as broad based societal changes, can often lead to changes in legislation.

As a professional property investor it’s  always recommended to keep abreast of the latest news and changes to whichever area of the industry you work in, avoiding any risks of fines from unintentional legal slip-ups.

2. Maximise rental income from your property

With your associated costs pared back successfully, we look towards the inherent value of your property itself on the rental market. The range of improvements you can make to your property, and the extra benefits you can offer with tenancy, are numerous. Selecting those which will improve your ROI most effectively is a matter of budget, time and target market.

Large-scale investment into your property, such as extending the footprint, can be great where there is significant upside in the local rental market, and when your investment is intended as long-term. Those looking for a medium investment term, and for properties already at the premium end of the local market rate, should instead look towards smaller improvements or tenancy benefits.

All the while, your ideal target tenants should be top of mind. If you’re looking to fill your property with students, high end fixtures may not be such a priority. Similarly if your letting is for retirement purposes, including that Netflix subscription with the rent might not be the finishing touch that will secure your tenant.

Below we look at the quick wins and major projects you can undertake to maximise the rental value of your real estate.

Let Each Room Separately

An entire property’s rental value is rarely greater than the sum of its parts. The combined value of letting each room in a shared house separately almost always results in a higher total monthly income.

Furthermore when letting individual rooms, in the event that one of your tenants leaves, you’ll not be left with a totally vacant property and will continue to receive rent from the remaining occupants. Filling this room with a new tenant is often quicker and easier than filling the entire property at once, too.

Splitting your asset into individual income generating compartments now goes beyond just bedrooms, too.

Those seeking to squeeze all of the extra value that their property has to offer can look towards the increasingly popular sharing economy, where letting out amenities such as garages, parking spaces, sheds and even loft storage space to the general public on a short-term basis is ever more common.

Review your Rent

As we’ve discussed, increasing the rent often isn’t the answer, particularly for those whose property is already let at the top end of the local market. If you’ve been fortunate enough to hold long term tenants in your property, however, any increases in price over the years will typically have been below the broader market rate in the same period.

It’s worth considering a market appraisal of your property’s rental value to see if you’ve got scope to raise your rent; either in line with market rates for a vacant property, or at a higher yet still favourable rate for existing occupants.

Get your free, no-obligation valuation.

Offer ‘Extras’

Rent isn’t the only overhead for your tenants to factor in to their monthly accommodation budget. Bills from gas and electricity, to internet, water, and home entertainment subscriptions all make up part of the sum that can be spent on living in a private rented home.

By including some of these overheads within the price of renting your property, you’ll make potential tenants feel that they’re getting a good deal and, by accounting for some of their monthly overheads, you’re freeing up some of their income to go towards a slightly higher rental value.

The extras you include with your tenancy will depend on the type of occupants you’re hoping to attract, be they professionals, families, students or retirees. Here are some common added benefits used to entice potential tenants:

  • Inclusive utility bills;
  • Broadband/fibre internet;
  • Entertainment subscriptions (Netflix, Sky, Spotify etc.);
  • Laundry or dry cleaning collection and delivery;
  • Food delivery subscriptions or online supermarket vouchers.
  • Furnishings;
  • ‘Pet friendly’ policies.

Clean & Tidy

It goes without saying that any property on the market should be thoroughly cleaned prior to any viewings or even photographers visiting. Think beyond the usual day-to-day cleaning tasks; it’s usually worth investing in a professional cleaning service who will undertake a ‘deep clean’ of your property, giving it a new lease of life to impress potential new tenants.

This will go a long way to justifying the higher rental value of your property, and may even lead to tenants feel like they’re getting a good deal, a win-win all round.

Refresh

You may not have visited your property for some time, especially after a long tenancy or over a long physical distance. Take a look at the condition of the walls and floors, fixtures and fittings, any damp, mould or mildew, and consider giving some TLC to any areas which are looking tired.

Much like a good spring clean, you’ll make a far better first impression both in listings photos and during physical viewings when your property looks its best.

You’ll also want to ensure everything is functional and works as it is intended, run a quick audit of the following areas in advance of anybody viewing your property:

  • Heating;
  • Door/window handles & locks;
  • Light bulbs;
  • Kitchen & bathroom fixtures;
  • Appliances;
  • Any furniture;
  • Toilet flush;

Finally, inform your tenants of any maintenance arrangements you have in place – to whom they should report issues, and how access to tradespeople may be granted to the property.

Ask us about all inclusive 24/7 maintenance callouts.

Larger Projects

Finally, if you’re intending to hold on to your investment for the long term, you may look to undertake some large improvement projects for a more significant boost to your property’s overall value as well as maximise rental income.

Kitchens and bathrooms are a good place to start. Newly modernised fixtures and appliances are an important selling point for many tenants, and will usually facilitate a higher rate of rent, especially where your previous fittings old or tired.

Always bear in mind, however, that there is an upper limit to the value which can be created from new kitchens and bathrooms. For lettings properties we typically find that mid-range is best for creating value, as the extra money spent on luxurious high end items almost never results in a better return than quality fittings on the middle shelf.

The ultimate way of adding to the value of real estate is by adding physical space. Do you have room to add an extra bedroom, an en suite, roof terrace, garage or annex? Have others in the postcode area done the same? If so, there may be scope to make some further investment into your buy-to-let.

Always keep abreast of ceiling prices in the local area and ensure that anything you spend will be less than the potential upside for your property’s value. If you make the most of letting your property on a room-by-room basis, or letting out amenities in the sharing economy as discussed above, then you’ll reap the greatest rewards from extending your property.

 

Need a managing agent with a like-minded approach to keeping landlords’ costs under control? Get in touch.

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