Considering we are a quarter of the way through 2015
and Easter under our belt, I was talking to landlord from Holborn the other day
about what is happening to the level of rents that are being achieved in the
Fitzrovia property market.
In terms of rents in Fitzrovia, it appears that rents
being achieved for new rentals (ie when the tenant moves out and new tenant
moves in) have risen in the order of 9.7% in the last 12 months on top of the
range properties, yet growth has remained moderately static for more basic
properties. However, landlords with existing sitting tenants, irrespective of
age are not increasing their rents, as most landlords prefer to keep their
existing tenant paying the same rent and have the peace of mind that their
tenant remains, paying the rent (thus reducing the risk of a void period).
It must be remembered rents only rose by 0.2% over the
two years of 2008 and 2009, due to an oversupply in the rental market in those
years. A lot of the people who couldn’t sell their property in Fitzrovia in
2008/9 when the Credit Crunch hit in 2008, decided to let their house out
instead of selling at a loss. In fact, the number of houses on the market in
Fitzrovia dropped by 44.6% between August 2008 and March 2010, a lot of which
came on to the rental market in Fitzrovia. However, looking at the longer term
though, tenants have had it good because since the turn of the Millennium,
average wages have grown by 46%, but rents outside London have only grown by
45% over this period.
I told the landlord that there is a lack of new rental
properties in Fitzrovia coming on the market, in fact according to the Office
of National Statistics, there are only 84 new rental properties coming to
the market each year in Fitzrovia but the population of Fitzrovia is rising by
168 people a year – something will have to give soon! This is compounded by the
fact a number of landlords are looking to sell their rental properties in the
coming months, as the property market in Fitzrovia has improved. This further
compounded as tenants in existing rental properties appear to be staying in
properties for longer periods of time.
Looking at the rents charged in Fitzrovia, historic
evidence in the UK suggests private market rents have moved in line with
general inflation. Government figures only go back as far as the year 2000, but
looking at other countries with similar housing markets (America, Australia,
Ireland and Holland) the fact is rents paid by tenants tend to rise in line or
just ahead of inflation.
As short term wage growth in Fitzrovia has eased off
recently, rising by only 1.3% in the last 12 months, taking average salaries in
Fitzrovia to £38,325pa, with the tax breaks announced by The Chancellor in the
Budget, I believe, even though rents have kept pace with inflation in the past,
renting as an option has become more affordable, and is increasingly seen as a
lifestyle choice. With returning economic growth and expected increases in the
rate of growth of wages, above inflation rental growth could rise.
If you want a chat about the local Fitzrovia property
market, pop in my office on Cleveland street for a coffee or email me on
benjamin.draper@martinco.com
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