With respect to the rental market, it is natural that people look forward. After all, when you buy to let, you do so as an investment and with the hope of making a good return on your money. This means the future is of significant interest to you. At Regent Property, we have great experience in the rental market in the SE1 postcode area of London, and we have witnessed many changes over the years. We know that many of our clients are keen to develop their 2018 expectations with respect to the SE1 rental market and hopefully this information will be of interest.
According to figures released by The Royal Institute of Chartered Surveyors (RICS), which were included in the September 2017 Residential Market Survey; there has been a slow in the growth of private rental prices in the English capital. For the 12 months leading to October 2017, growth was listed at 0.8% while for the 12 months leading to September 2017; this was listed as 0.9%.
Their stated expectations are that rents in London will continue along this trend, with rents facing sustained downward pressure in 2018. The growth in private rental prices for England for the same period was 1.5%, and this chimes with figures in the property market which suggests that London prices are slower compared to the rest of the country.
There will be many people who will say that this is about time, but there are many factors involved. When it comes to London prices, it is important to remember that there are many different parts of London and it isn’t always helpful to group the area together as one.
SE1 rental market has a lot of attractive areas
With respect to the SE1 postcode area, there are many attractive areas like Southwark, Bermondsey, Bankside, Lambeth and even the South Bank and Old Kent Road. However, these areas clearly don’t have the same price-frames as areas in the west end of the city and it would be wrong to suggest that the SE1 postcode area will face the same slowdown as is perhaps happening in Chelsea and Kensington.
When it comes to predicting the property market, it is best to look at the things we know. Landlords are coming under increasing pressure with new regulations and tax changes. If all other things were equal, the majority of landlords would look to raise prices to alleviate some of the increase pressure they are under. The full story is though that tenants are also under severe pressure when it comes to their finances and there have been many experts wondering if a ceiling is close to being reached with respect to what tenants are able to pay. The idea of what tenants are willing to pay is one aspect that is always important in the property market, and this provides flexibility for growth and movement but if a tenant reaches the edge of what they are able to pay, there isn’t really much that a landlord can do to push the matter.
The anecdotal evidence for the rental market of late and the figures suggest that rental fees may well rise, but they won’t rise by much.
Know what the average rents and expected yields are
The average property rents for the SE1 postcode area, as stated by the home.co.uk website, are £2,649 per calendar month. This can be broken down into an average rent of £1,859 per calendar month, £2,753 per calendar month for a two bedroom property and £5,089 per calendar month for a three bedroom property. With respect to four and five bedroom properties, the average rental feel comes in at £3,656 and £3,390 per calendar month. All of this makes the SE1 rental market appealing to many.
These figures suggest that the average rent falls when moving from three to four to five bedroom properties. This may not intuitively be the case but the small level of supply and demand is likely to play a factor. There is also the fact that there is no further breakdown of location for the property sizes, which means if a lot of three bedroom properties are available in a more affluent and attractive area, the rent will be higher.
Landlords and investors should always hold an interest in the expected rental yields, and this is true for the SE1 rental market. For the SE1 postcode, the expected rental yield for a one bedroom property is 4.53% while the expected rental yield for a two bedroom property comes in at 3.59%. For a three and four bedroom property, the expected rental yield stands at 2.79% and 2.57% respectively and for anyone interested in a five bedroom property in the SE1 area, the expected rental yield is 3.04%.
If you are looking ahead to 2018 and you need to make predictions, using the current figures as your base and expecting a slow rate of growth appears to be the common consensus. If you want to talk about an area in particular or you need guidance with respect to the SE1 rental market, come and see Regent Property.