50s Are the New 40s
Ask, but don’t get quite as much…
Fewer homes in London are let at above their asking price.
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There’s always a bit of negotiation on rents, just as with house sales, and when there is lots of demand for property the rent agreed is often above the initial asking price. But the latest data from Countrywide Lettings index shows that in Central London fewer homes are being let for above their asking price. Just 8 per cent of homes were let at above asking price, falling from 17 per cent in the same period last year. This is the lowest proportion seen in August since 2011. Greater London as a whole saw 13 per cent of homes let above asking price, 4 per cent lower than the same period last year.
Why is this? If property sales are easing one might expect there to be more demand for rental homes and hence a bigger proportion of lets over the asking price.
The answer is more supply. A combination of more supply as landlords rushed to buy property before the stamp duty surcharge came in and a change in housing market sentiment after the referendum means that supply has matched or grown faster than tenant demand.
In London and the South East the number of homes available to rent in August grew by 26 per cent and 22 per cent, respectively, compared with the same period last year. That compares with growth in tenant demand of just by 8 per cent in London and 3 per cent in the South East. Unlike the sales market where the commitment to a property is bigger, rental prices adapt very quickly to changes in market conditions and that means asking prices are finely tuned to tenant demand.