The Richmond Magazine - May 2008
Solid as a rock
A view shared by Gerald Fitz-Gibbon of Richmond based lettings agency Fitz-Gibbon. He says that, while rents may not have kept pace with the rise in prices, the demand for property certainly has.
"Since we have been in Richmond, which is for over 20 years, there hasn't really been a time when the rental market has died. It has remained fairly constant"
The only fluctuations occur when the sales market stalls and buyers turn to renting while they wait to see what is happening. During these periods the rental housing stock can also increase, as owners opt to let rather than sell.
"In Richmond there are many people lucky enough to have the choice" says Gerald Fitz-Gibbon. "Their preferred option may well be to sell, but because of the instability of the market they opt to let their property for a while. We currently have half a dozen very large houses whose owners have decided to go this route".
But Fitz-Gibbon can never get enough property in Richmond. The agency concentrates on corporate lets, and the Richmond area is always a first port of call for overseas executives looking for a base close to London.
Whereas prices have doubled in a decade, say Gerald, rentals have risen far less dramatically. Typically, a two-bedroom conversion flat in a food road in Kew would have cost £1,100pcm back in 1998. Today it would be £1,450. On Richmond Hill a three-bedroom flat would have been £2,200pcm back in 1998, whereas today it is being marketed for £2,500.
"What is really interesting is that, in most cases, the capital value of these properties has virtually doubled, yet rent levels of most flats, apartments and smaller houses remain not too distant from the figures of 10 years ago" says Gerald.
This has resulted in gross yields dropping from an expected 10-11% back in 1998 to 4-5% today. The exception is rent levels of larger four- and five-bedroom family homes, which have increased dramatically in comparison to the more modest sized properties.
Typically in Richmond, a large five-bedroom family home which was rented out for £3,900pcm back in 1998 is now £7,000pcm.
Gerald puts the jump down to a significant increase in the housing allowance now available to senior corporate personnel.
"Interestingly, gross yields of these larger properties have kept pace over the years with a typical 5% back in 1998 and a similar percentage today".