Record-High Rents in South London!

The average rent for a whole property in Lambeth, Southwark and Wandsworth is now a whopping £1,980 per month, according to Property Portal Rightmove. This is up 11% from the same time last year. The average rent varies depending on the borough, with Lambeth being the most expensive, at £2,285 per month. Wandsworth is the second most expensive, at £2,187 per month, and Southwark is the least expensive, at £1,980 per month. Some inflation-busting figures in my table below - how does your property's rent compare to this time last year?

With rents as high as they are in South London, landlords have a great opportunity to maximise their profits. Here are some tips on how to do just that:

• Choose the right property. The location of your property is one of the most important factors in determining how much rent you can charge. Proximity to tube, having storage for bicycles and plenty of parking nearby are all desirable.
• Make sure your property is in good condition. Tenants are more likely to pay higher rent for a property that is clean, well-maintained and has all the amenities they need. If there are any outstanding maintenance jobs then get them done before showing tenants around and offer everything in tip top condition for viewing.
• If you have a good property in a desirable area, you should be able to command a higher rent. 
• Consider investing in energy-efficient upgrades to your property, as this can help you attract tenants who are looking to save money on their energy bills. Grants may be available.
• If you have a long-term tenant who is a good payer, consider the pros and cons of reletting the property to a new tenant. Often times a meet in the middle between market rent and the cost of remarketing will help the tenant stay longer and avoid the costs of finding a new tenant.

If you are looking for a market appraisal to see what your property is worth in today's market then look no further. Check out my online valuation tool or drop me a line and I'd be happy to come and visit.

Rents at All-Time High in South London

It will come to nobody's surprise that recent data highlights that UK rents were up 15% in Q1 2023 compared to Q1 2022 with average monthly room rents at an eye-watering £683 - unsurprising therefore that tenants are struggling to find affordable housing. Alas the cost of inflation and high energy prices are working its magic on the rental prices at the moment.

I can tell you that from my research the average room rents reached a staggering £952 in Q1 2023, and not a single postcode in London has an average monthly room rent of under £700. South London average room rent stands at £681 as I type!

Here is what I found!

Postcode	Lowest rent	Mean rent	Median rent	Mode rent	Highest rent
SW2	£400	£650	£600	£550	£1,000
SW4	£350	£626	£600	£575	£1,200
SW8	£550	£700	£650	£600	£1,200
SW9	£500	£675	£650	£600	£1,200
SW11	£450	£650	£600	£550	£1,100
SW12	£400	£650	£600	£550	£1,200
SW13	£500	£700	£650	£600	£1,200
SW14	£450	£650	£600	£550	£1,200
SW15	£500	£700	£650	£600	£1,200
SW16	£350	£635	£600	£550	£1,200
SW17	£450	£600	£550	£500	£1,000
SW18	£500	£650	£600	£550	£1,000
SW19	£600	£800	£750	£700	£1,200
SW20	£550	£700	£650	£600	£1,000

Why?

Well, South London landlords have been selling up, plain and simple. 66 rental properties per day are being sold and occupied by homeowners, decreasing the supply of rental stock. This is leading to great profits for those that want to stay in the market and put up with the ever increasing amount of red tape, taxation and risk associated with letting their property. As I wrote about previously the proposed Renter's Reform Bill is doing nothing to aid the pro-landlord sentiment, that is for sure.

If you are on a low loan-to-value mortgage you will have built up enough equity to ride out the high interest wave and fix at a reasonable rate, but for those that entered the market less than 10 years ago they will find it touch to make a decent return off their investments. Many are not breaking even once repairs, letting fees, accountancy fees and so forth are factored in.

So is selling for you? Depends on your personal situation of course. Happy to have a conversation about what the market is doing. Reach out via email and let's start the conversation.

Clapham Rents Set to Rise to £2,208 pm in Next 5 Years

It’s now been a good 18/24 months since annual rental price inflation in Clapham peaked at 4.3%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Clapham rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Clapham rents will regain their upward trend and continue to increase as demand for Clapham rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Clapham). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Clapham, that Clapham landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Clapham buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Clapham landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin).

Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth. It really is swings and roundabouts!

So, what does this all mean for landlords and tenants in Clapham? In my considered opinion,

Rents in Clapham over the next 5 years will rise by 5.5%, taking the average rent for a Clapham property from £2,093 per month to £2,208 per month.

To put all that into perspective though, rents in Clapham over the last 12 years have risen by 35.8%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Clapham economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections

In the past, making money from Clapham buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Clapham property market, as a Clapham landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Clapham, Regional and National property market’s, to enable you to continue to make money.

One place for that information is the Clapham Property Blog

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

Clapham Buy-To-Let Predictions up to 2037

You’ll have seen my most recent market update. If you had missed it, check out the video here on YouTube. It would appear that the rental market is a little bit “soft” at the moment. An oversupply is certainly causing prices to come down. Odd this, because the summer is notoriously the busiest time of the year, as I’ve written in the past. Fear not, I suspect that the real rush is yet to come as the August and September months approach.

It would appear that rent rises are easing in Clapham, at least they have been over the last year. At the same time I felt that in some parts of the UK rents had actually dropped for the first time in over eight years. Recent research backs up this prediction.

Rents in Clapham for new tenancies fell by 1.2% in the last 12 months (i.e. not existing tenants experiencing rental increases from their existing landlord). When we compare that current rate with the historical rental inflation in Clapham, an interesting pattern emerges...

·         2016 - Rental Inflation in Clapham was 7.7%

·         2015 - Rental Inflation in Clapham was 9.2%

·         2014 - Rental Inflation in Clapham was 9.4%

The reason behind this change depends on which side of the demand/supply equation you are looking from. On the demand side (from the tenants point of view) there is the uncertainty of Brexit and the fact that salaries are not keeping up with inflation for the first time in three years. Critically this means tenants have less disposable income to pay their rent. As an aside, it is interesting to note that nationally, rent accounts for 29% of a tenant’s take home pay (Denton House).

On the supply side of the equation (landlords point of view) Brexit also creates uncertainty. However, the biggest issue was a massive upsurge of new rental properties coming on to the market in late 2016, caused by George Osborne’s new 3% stamp duty tax for landlords in the first part of 2016. This meant a lot of new rental properties were ‘dropped’ on to the rental market all at the same time. The greater choice of rental properties for tenants curtailed rental growth/inflation. A slight softening of Clapham property prices has compounded this.  Figures from The Bank of England suggested that first time buyers rose over the last 12 months as some were more inclined to buy instead of rent. Together, these factors played a part in the ongoing moderation of rental growth. Smaller landlords are selling up, you see, fuelling FTBs’ appetite to get on the ladder. This won’t be affecting the middle of the market or the larger rental properties’ capital values.

The lead up to the General Election in May didn’t help: after all people don’t like doubt and uncertainty. So now that we have a mandate for going forward over the next 5 years hopefully that has removed any stumbling blocks stopping tenants making the decision to move home.

Whether it be ‘hard’ or ‘soft’ Brexit negotiations (and with the Election result the Tories might have to be ‘softer’ on those negotiations) the simple fact is, we aren’t building enough properties for us to live in. Both in Clapham, Greater London and the wider UK, long-term population trends imply that rents will soon be growing faster than inflation again. Look at the projections by the Office of National Statistics. 

Tenants will still require a vibrant and growing rental sector to deliver them housing options in a timely manner. As the population grows in Clapham, and further afield, any restriction to the supply of rental properties (brought about by poor returns for landlords) cannot be in the long-term best interest of tenants. Simply put rents must go up! 

The fact is that I see this as a short-term blip and rents will continue to grow in the coming years. With rents only accounting for 29% of a tenants’ disposable income, the ability for most tenants to absorb a rent increase does exist.

As always, if you are keen to start investing, or start doing something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.