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Glut Forces Cuts In London Rentals

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http://www.ft.com/cms/s/0/b8d0ba90-6005-11...0077b07658.html

By Sharlene Goff and Elaine Moore

Published: August 1 2008 21:19 | Last updated: August 1 2008 21:19

Rents across London have started to fall by as much as 20 per cent as a glut of supply forces landlords to cut prices.

After a year of strong growth, rents on properties ranging from family houses in Kensington to two-bedroom apartments in Canary Wharf are now being slashed by hundreds of pounds a week, according to estate agents.

The owner of a house in Chelsea, which was let last year for £2,700 a week, was now taking offers of more than £2,000, said Tim Hyatt, head of lettings at Knight Frank. Riverside apartments that were being let for up to £1,500 a week this time last year were now going for about £1,200.

"We have noticed a huge increase in stock in the last three to four months," said Mr Hyatt. "While inquiries have only increased marginally."

Rents were coming down fastest on properties presented in less than immaculate condition, or located slightly further from the Tube.

Average UK rents, which had been rising rapidly, have now stabilised just short of £1,000 a month, according to Paragon Mortgages.

Estate agents said tenant demand had not risen in proportion with the increase in rental properties.

While rents in parts of the UK continue to rise, the picture is very different in prime areas of London.

Knight Frank said rents in the capital were down between 5 and 20 per cent compared with the spring, while Savills, another estate agent, said some rents had fallen about 10 per cent.

The slide comes as so-called reluctant landlords – owners who have been unable to sell their properties and let them out instead – have put pressure on rental prices. Agents are also reporting a decline in demand from corporate tenants.

Some agents have reported double the amount of rental stock on their books compared with a year ago.

The Royal Institution of Chartered Surveyors said new landlord instructions rose by almost a third in the first three months of the year.

Properties in Knight Frank's core lettings market of between £1,000 and £2,000 per week were letting fast, for close to the asking prices. But some family houses in prime areas such as Chelsea and Knightbridge have taken a big hit.

Edited by hogwash

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Guest DissipatedYouthIsValuable

http://www.ft.com/cms/s/0/b8d0ba90-6005-11...0077b07658.html

The Royal Institution of Chartered Surveyors said new landlord instructions rose by almost a third in the first three months of the year.

Properties in Knight Frank’s core lettings market of between £1,000 and £2,000 per week were letting fast, for close to the asking prices. But some family houses in prime areas such as Chelsea and Knightbridge have taken a big hit.

Is £8k a month considered affordable? There can't be many who can do that?

Edited by DissipatedYouthIsValuable

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The owner of a house in Chelsea, which was let last year for £2,700 a week..

F me, you could hire out an entire wing of travel lodge for that.

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Guest DissipatedYouthIsValuable
F me, you could hire out an entire wing of travel lodge for that.

I know Knight Frank do cover the top end, but the size of the market must surely be quite small.

Or maybe I'm just very naive to the wealth out there?

Edited by DissipatedYouthIsValuable

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Interesting to see Seriously Prime London taking a pasting. I presume this is banking-related, as those rents are pretty sodding extreme.

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I had no idea FT journos spoke JavaScript.

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I know Knight Frank do cover the top end, but the size of the market must surely be quite small.

Or maybe I'm just very naive to the wealth out there?

It's aimed at the Investment Bank CEO house share market.

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See Rentals sub-forum for more details.

In a nutshell, London outskirts cheaper end: reductions of 5% this month on some I've been watching. Places I offered on and was refused, unlet. Postcard outside a newsagent with the 800pcm scribbled out and "negotiable" written next to it. Private landlord who had let somewhere I'd called for 3 weeks ago called me up today to say he has another place if I'm interested, left me a message. I don't know if the other tenant dropped out or he really does have another place, but never got called back before.

August slump at the cheaper end or longer slump?

Interesting times.

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Guest DissipatedYouthIsValuable
It's aimed at the Investment Bank CEO house share market.

There surely can't be that many of them about?

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An oft forgot problem for rentals in London is the, ahem, economy.

To be more precise, when the economy is booming most people who work in, for example, the City do not mind taking out a 12 month lease on a flat. If you are a contractor - say in IT, a Business Analyst or other similar sector - you take the lease in the full knowledge that even if your client invokes their 4 week termination clause in your contract that you most likely will be able to find another contract within hours if not days.

However, now that the economy is turning down and redundancies are looming such self-employed contractors are very reluctant to take out that 12 month flat lease. You could easily win a 6 or 12 month contract with a City investment bank today, sign up for that 12 month flat lease only to discover that the first week you begin the contract the bank actually terminates your contract. In a down-turning economy you might find it impossible to get another contract for a year or more but are still paying a hefty flat rental due to that lease.

I have seen this happen time and time before. Such things are more common in the run-up to mass redundancies as City Banks, for example, are notorious for taking loads of contractors on when they know big redudancies are in the pipe-line. Part of the reason is to try and make their departments look more important, more useful and hence more needed. Part of it is to try and avoid permanent redundancies by taking on contractors and then firing them when they are told to make redundancies in the hope of keeping their permanent head-count intact.

Not a problem if your home is in London but as many of the people who work in the Service industries do not have London as their main home then I have no doubt that rents are now dropping because people are reluctant to take work in London and sign up to those 12 month leases. I, myself, would not consider London now for this very reason.

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And Surrey commuter belts...

http://www.rightmove.co.uk/viewdetails-211...7&tr_t=rent

12 June 2008 - Price changed: from '£10,000 pcm' to '£9,500 pcm'

27 July 2008 - Price changed: from '£9,500 pcm' to '£7,500 pcm'

http://www.rightmove.co.uk/viewdetails-217...9&tr_t=rent

24 July 2008 - Price changed: from '£9,500 pcm' to '£6,500 pcm'

http://www.rightmove.co.uk/viewdetails-210...4&tr_t=rent

07 July 2008 - Price changed: from '£1,212 pw' to '£1,061 pw'

16 July 2008 - Price changed: from '£1,061 pw' to '£981 pw'

24 July 2008 - Price changed: from '£981 pw' to '£865 pw'

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I know Knight Frank do cover the top end, but the size of the market must surely be quite small.

Or maybe I'm just very naive to the wealth out there?

Realistically, £2.5k PCM is not all that much in London, especially in areas such as Wimbledon (where I am). We've just sold and have decided to rent for a while to see what the market does. We want to spend around £2k but are having issues finding anything nice for less than £2.3k. We'll end up closer to £3k I imagine. You really don't get much for your money around here at the moment. It's actually got to the point where we're thinking of moving out, perhaps nearer Brighton or maybe Henley and renting there and traveling into London each day. We've just had a baby so the wife isn't working for a year so it might be a nice time to experience some clean air and find something a bit cheaper. :)

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There surely can't be that many of them about?

Revolving door at the moment.......... change 3x a year? So prob 600 jobs a year tee hee.

Seriously was in Kensington for lunch today (birthday bash) absolutely no sign of high end crunch there; restaurant (£100+/head) full, streets busy etc. M&S deserted though ...........middle stressed? Or poor product lineup?

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An oft forgot problem for rentals in London is the, ahem, economy.

To be more precise, when the economy is booming most people who work in, for example, the City do not mind taking out a 12 month lease on a flat. If you are a contractor - say in IT, a Business Analyst or other similar sector - you take the lease in the full knowledge that even if your client invokes their 4 week termination clause in your contract that you most likely will be able to find another contract within hours if not days.

However, now that the economy is turning down and redundancies are looming such self-employed contractors are very reluctant to take out that 12 month flat lease. You could easily win a 6 or 12 month contract with a City investment bank today, sign up for that 12 month flat lease only to discover that the first week you begin the contract the bank actually terminates your contract. In a down-turning economy you might find it impossible to get another contract for a year or more but are still paying a hefty flat rental due to that lease.

I have seen this happen time and time before. Such things are more common in the run-up to mass redundancies as City Banks, for example, are notorious for taking loads of contractors on when they know big redudancies are in the pipe-line. Part of the reason is to try and make their departments look more important, more useful and hence more needed. Part of it is to try and avoid permanent redundancies by taking on contractors and then firing them when they are told to make redundancies in the hope of keeping their permanent head-count intact.

Not a problem if your home is in London but as many of the people who work in the Service industries do not have London as their main home then I have no doubt that rents are now dropping because people are reluctant to take work in London and sign up to those 12 month leases. I, myself, would not consider London now for this very reason.

"City Banks, for example, are notorious for taking loads of contractors on when they know big redudancies are in the pipe-line"

I am not seeing this unfortunately

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And Surrey commuter belts...

http://www.rightmove.co.uk/viewdetails-211...7&tr_t=rent

12 June 2008 - Price changed: from '£10,000 pcm' to '£9,500 pcm'

27 July 2008 - Price changed: from '£9,500 pcm' to '£7,500 pcm'

http://www.rightmove.co.uk/viewdetails-217...9&tr_t=rent

24 July 2008 - Price changed: from '£9,500 pcm' to '£6,500 pcm'

http://www.rightmove.co.uk/viewdetails-210...4&tr_t=rent

07 July 2008 - Price changed: from '£1,212 pw' to '£1,061 pw'

16 July 2008 - Price changed: from '£1,061 pw' to '£981 pw'

24 July 2008 - Price changed: from '£981 pw' to '£865 pw'

The Cobbetts hill house is for sale as well

http://www.rightmove.co.uk/viewdetails-199...=1&tr_t=buy

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An oft forgot problem for rentals in London is the, ahem, economy.

To be more precise, when the economy is booming most people who work in, for example, the City do not mind taking out a 12 month lease on a flat. If you are a contractor - say in IT, a Business Analyst or other similar sector - you take the lease in the full knowledge that even if your client invokes their 4 week termination clause in your contract that you most likely will be able to find another contract within hours if not days.

However, now that the economy is turning down and redundancies are looming such self-employed contractors are very reluctant to take out that 12 month flat lease. You could easily win a 6 or 12 month contract with a City investment bank today, sign up for that 12 month flat lease only to discover that the first week you begin the contract the bank actually terminates your contract. In a down-turning economy you might find it impossible to get another contract for a year or more but are still paying a hefty flat rental due to that lease.

I have seen this happen time and time before. Such things are more common in the run-up to mass redundancies as City Banks, for example, are notorious for taking loads of contractors on when they know big redudancies are in the pipe-line. Part of the reason is to try and make their departments look more important, more useful and hence more needed. Part of it is to try and avoid permanent redundancies by taking on contractors and then firing them when they are told to make redundancies in the hope of keeping their permanent head-count intact.

Not a problem if your home is in London but as many of the people who work in the Service industries do not have London as their main home then I have no doubt that rents are now dropping because people are reluctant to take work in London and sign up to those 12 month leases. I, myself, would not consider London now for this very reason.

:lol::lol: That's funny. Does it work?

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:lol::lol: That's funny. Does it work?

I dont suppose it does, but, if its true, then that explains why the entirely "always redundant in reality" middle management get culled in recessions.

It also smacks of incompetent management at the top, and these organisations really deserve to fail. Bail the banks as too big to fail?

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Realistically, £2.5k PCM is not all that much in London, especially in areas such as Wimbledon (where I am). We've just sold and have decided to rent for a while to see what the market does. We want to spend around £2k but are having issues finding anything nice for less than £2.3k. We'll end up closer to £3k I imagine. You really don't get much for your money around here at the moment. It's actually got to the point where we're thinking of moving out, perhaps nearer Brighton or maybe Henley and renting there and traveling into London each day. We've just had a baby so the wife isn't working for a year so it might be a nice time to experience some clean air and find something a bit cheaper. :)

The difference in what you get for £2.5k PCM in central London vs. a bit further out can be quite remarkable. I pay about that near Marlow and have a 7 bed place with 2 acres of garden (and a gardener). You can get from Maidenhead (a 10 minute dtive away) to Paddington in about 25 minutes, which isn't all that different of a commute than if you were in Richmond or Wimbledon. There isn't all that much demand for renting out here, it would seem, so you can get away with some low-ball offers on very nice houses and end up paying a somewhat reasonable rent (I know this does sound like an awful lot of money to some people, and frankly, it is).

I noticed this listing if anyone is interested in renting out this way: http://www.primelocation.com/uk-property-t...d/SIMA999002248 There are quite a few similar in the area.

The thing about people paying 10k a month in central London is that a lot of people living in those places aren't paying themselves. I was talking to an expat in London about renting and mentioned the amount that we pay for our house and they replied that they paid 20,000 a month for a house that isn't all that different. Of course, their company is paying, not them, so when they found a place that worked for them, they took it even though the price was ridiculous. Given where we're at in the economic cycle, at some point corporations are going to start focusing more on cost control and limit how many people can get away with this.

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I live in a central London new build development of flats. Most are owned by overseas people as a holiday home or as an investment.

Some are let out and most of these are to corporate lets - usually to Japanese or German companies.

For the past months I have seen more and more people leave as they are posted home. The number of flats available on "Rightmove" has steadily increased. It has risen from 60 in June to 75 at the end of July.

Now I know that this is not vaguely scientific. Rightmove keeps flats on after they have been let and there are sure to be duplicates.

However, as a rough guide this is significant as summer used to be the busy period here. Owners returning to their holiday homes and flats being rented out for lucrative "holiday lets". It's very quiet here.

I'm seeing some deductions in advertised rent but not many. It is taking time to trickle through. Maybe the agents are more approachable with enquiries but when I moved here I found it difficult to get LL's/agents to budge in price and it took me a long time to find a BTL LL who did actually want a long term tenant at a reduced price.

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This is actually crucially important.

If rents fall, that means houses are even more over-priced according to their potential income stream.

Triple-squeeze for those BTLers now - falling prices, rising mortgage paments, and falling cashflows. I think we know how it's going to end....

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A relative of mine was trying to sell their place in Chiswick no interest so have been forced to rent it out instead. It doubled its price in 5 years but they would not drop the price guess it might be similer for a lot of london

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I've been banging on that this would happen to prime central London since about my first post! As I rented in zone 1 post dotcom bust and was shown dozens of empty houses and told that we could negotiate at least 20% off advertised rental. They don't want to bring down the advertised rentals but with corporate, ex pat clients shrinking, they take what they can, sharers instead of families etc. but try to keep that quiet. I don't know if the profile of ownership has changed in these areas but mostly places were owned by property trusts for years and mortgage free so for them, it was about keeping up cash coming in without destroying their own brand so to speak.

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Realistically, £2.5k PCM is not all that much in London, especially in areas such as Wimbledon (where I am). We've just sold and have decided to rent for a while to see what the market does. We want to spend around £2k but are having issues finding anything nice for less than £2.3k. We'll end up closer to £3k I imagine. You really don't get much for your money around here at the moment. It's actually got to the point where we're thinking of moving out, perhaps nearer Brighton or maybe Henley and renting there and traveling into London each day. We've just had a baby so the wife isn't working for a year so it might be a nice time to experience some clean air and find something a bit cheaper. :)

Surely 2.5k a week (figures mentioned in the article) is still considered a lot of money even in that there fancy London.

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