More Rentals Available in Capital Sees ‘Flattening’ of Rents

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More rental properties are available in the capital, resulting in a lowering of monthly rents, according to one leading estate agent. 

There are in fact 60 per cent more rental properties advertised in London this month – nearly a quarter more than there was at the start of the pandemic. That’s still 40 per cent fewer than the same time last year (when many tenants moved home). At that time, owners of holiday lets also turned to long-term renting following the effective closure of the tourist market.

Rental income falling in the capital

The data, from Chestertons estate agents, also revealed that many rental properties were from ‘accidental landlords.’ These could be buy to let landlords put off by the low selling prices in the capital. They could also be couples looking to save money by co-habiting and renting out the other property. 

The result is the increase in supply is expected to flatten rental prices in the city.

House price drops of seven per cent by 2024

At the same time, homeowners can expect the value of their property to plummet over the next couple of years. Experts began to speculate last week following the latest Office for National Statistics figures, which showed a five per cent fall in house price growth between May and June. Despite this, the average UK house price was £286,000 in June – £20,000 higher than the same time last year.

The predictions are for a seven per cent fall in property prices over the next two years. This is fuelled by expectations that the Bank of England will increase interest rates to 3.75 per cent in April next year. It is currently sitting at 1.75 per cent. In London and the South East – where prices are highest compared to average incomes – the price drops are likely be even more severe. There the price of property could fall by as much as 12 per cent.

Gazumping on the rise 

Rightmove recording a drop of £23,000 in asking prices for 

property in London this month. The result has been an increase in gazumping tactics, according to several estate agents in the capital. 

One conveyancer, from the capital’s Osbornes Law firm said this form of ‘price chipping’ pointed to a weaker market – one that was already swinging from seller to buyer.

A shortage in the number of homes for sale is continuing to support the property market’s frenetic activity but higher mortgage interest rates and increasing inflation is expected to slow things down considerably. To the extent that next year is expected to show the slowest property market activity in over a decade.

But it’s not all doom and gloom. Anthony Codling, of property website Twindig, tempered pessimistic attitudes by reminding the doom-mongers: “We tend to overestimate the likelihood of bad things happening. House prices have fallen in only 16 out of the last 91 years.

‘Increasing living costs and rising mortgage rates are likely to temper house price growth…once we have won the war on inflation we can expect prices to continue to rise.”

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