Cost-conscious tenants compete for cheaper properties

Fierce competition for more affordable rentals across London has resulted in a critical shortage of cheaper homes to let.

Cluttons says that around 40% of tenants want to rent for between £250 and £400 a week, but that only 15% of available property currently falls into this bracket.

Cluttons said that the inevitable effect is to push lower rents upwards, while in contrast, higher rental value properties are taking longer to let, which is creating some downward pressure on prices in this sector.

Across the whole market, Cluttons forecasts an increase in rental values of 2–3% in 2011.
 
In 2010, it says, landlords were achieving higher uplifts in rent when contracts were renewed, but the rate of increase has slipped back as landlords respond to tenant sensitivity to cost and job security.

Lynn Hilton, partner for residential lettings at Cluttons, said: “Tenants are considerably more cost conscious than they were even a year ago, as it becomes apparent the economic recovery will be slower than expected.

“Relocation agents, too, are working to much smaller budgets, typically £250–£400 per week, which is contributing towards a bottleneck in the market at this level where supply is at its lowest.”