Asking rents in London are falling due to the over-supply of new-build homes, new research has revealed.
According London Central Portfolio, supply is beginning to outweigh demand in some areas due to the number of new developments, with asking rents falling by 6% over the last three months.
LCP said that with 22,000 units going on sale between Battersea and Nine Elms the London market south of the river is beginning to suffer.
The number of available rental properties in the area has gone up by 28.1% in the last year.
Meanwhile, the number of properties actually let has also dropped 14.8% over the same period and there has been a fall in achieved rents of 2.8%.
This is due to tenants’ increased bargaining power and has been exacerbated by high asking rents for flats in new developments, at a time when corporate housing budgets are being tightened.
Naomi Heaton, CEO of LCP, said: “In much the same way as we see in the sales market, there is increasing fragmentation in the lettings market, according to property type (new build or traditional stock) and by price point.
“Alongside the oversupply of rental stock in new build heartlands, the uncertain economic outlook has resulted in tighter tenant budgets. It is therefore not surprising that recent reports indicate a 14.8% fall in the number of properties rented south of the river over the last three months and a 6% discount on asking rents.”
The picture for the rental market has been far more robust in areas with limited new build potential.
In prime central London, where stock levels have increased by just 5%, rents have risen by 1.5% over the last three months. The number of properties being let has also seen a 2.5% increase over the same period.
Heaton said: “In contrast to the dynamics south of the river, the mainstream rental market in PCL has continued to perform positively as demand for well-presented rental property remains high and stock remains scarce.”
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