London letting agents search for tenants

There is “surprisingly poor demand” from “a reduced pool of tenants” in London this Spring, say letting agents in the latest RICS survey.

Out of 16 comments on the state of the rental market, none give the impression that landlords are finding tenants easily and 7 refer to over-supply of property.

“Surprising poor demand, over-supply and Brexit uncertainty is reducing rents for 1 and 2 bed flats particularly,” according to Finchley-based Jeremy Leaf in the March RICS survey.

“Not sure where the floor will be as rents continue to slip back,” says central London-focused Mark Wilson.

“Lack of demand from tenants, especially the usual influx of overseas tenants. Some price reductions and extended void periods,” according to Pimlico’s James Gubbins.

The finger of blame is not just pointed at Brexit but at tenants deciding to buy instead of renting, “due to greater mortgage availability”, according to Cobham’s Anthony Webb.

In addition, “new tower blocks of flats turning to renting because sales have slowed [means] it is unlikely there will be much growth in rental levels for second hand,” says SW1’s Terence Osborne.

On the numbers side of the survey, it was the ninth consecutive month that the balance of respondents predicted rents would fall over the next quarter.

It was also the tenth consecutive month that the balance observed tenant demand dropping.

However, the mismatch between supply and demand may have reached a peak, with the past two months showing respondents on balance seeing slightly less rental property come onto the market.

This could be down to the slower turnover of rental property in the sales market as well as landlords feeling less confident about the wisdom of ending existing tenancies in a slow market.

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