London Lettings - December 2007
Susan Fitz-Gibbon, head of London residential lettings agent Fitz-Gibbon, reports on the current market and looks ahead to 2008
Lettings market to develop faster
The lettings market is exceptionally strong and indications are that the market will continue to grow, with the corporate sector continuing to rent and individuals seeking to keep their options open until they have a clear indication of what is happening with interest rates and the economy generally.
Corporate relocating tenants continue to dominate the market for Fitz-Gibbon. Figures are up on last year with over 75 per cent of tenancies extending for a further year, and rent increases are also up on previous years. The demand for good quality properties is so high that companies relocating personnel understand the need to retain the properties they are currently renting. For incoming personnel, the offer of premium leases continues and this is always indicative of a healthy rental market.
We are also witnessing viewing of properties earlier than ever and have seen tenancies in Richmond secured as early as six months in advance. These tenants are typically seeking three, for and five-bedroom homes.
Rent increases have historically been in line with the retail price index with a minimum increase of three per cent. However, this is too low in the current market and Fitz-Gibbon is negotiating far higher figures, including a 22 per cent increase on one property. We are confident that rental values will continue to increase in the coming months, although the market will always lag behind the sales arena. Maybe we will see a change here with extensions on tenancies being negotiated at the time rather than at the outset. Tenants are becoming more discerning and increasingly likely to expect the best with regard to presentation. This trend is coupled with increased demand for interior design and designer-style furnishings.
The Tenancy Deposit Scheme is now up and running, Energy Efficiency Tests are set to come into force in October 2008 and the change in capital gains tax comes into effect in April 2008, so it's clear the market is set to develop even faster.