The number of people committing to tenancies for two years or more is declining according to new data released by Foxtons.
In 2016 the average tenancy length was only 13 months increased to 23 months upon renewal says the agency.
Those staying two years or more accounted for only 38 per cent of tenants in the first quarter of this year, down from 44 per cent in the final three months of 2016.
“This demonstrates a degree of caution from tenants when it comes to committing to a lengthy lettings contract and we don’t expect this dynamic to change in the near term, particularly given the ongoing uncertainty around Brexit” explains Ed Phillips, managing director of the agency’s lettings operations.
“So while the government’s proposal [for longer tenancies, contained in the Housing White Paper] might have tenants’ best interests at heart, it’s clear that the exibility afforded by the status quo remains an attractive proposition, and this will not be a silver bullet in helping generation rent” he adds.
The number of properties listed to rent with Foxtons increased for the third quarter in a row in the first three months of 2017, although this was offset by an increase in demand from renters.
The proportion of renters from Western Europe in Q1 2017 remained largely the same as at the end of 2016. There has been a small increase in domestic renters in the first quarter to comprise 41 per cent of all renters, rising from 39 per cent in Q4 2016.
The increased supply has continued to put downward pressure on rental prices, the agency says, although there are indications that this supply/demand balance is beginning to align.
The largest flats in central areas continue to be impacted most by falls in rents. Meanwhile, larger flats in outer London have performed more strongly, with significantly smaller falls in rents recorded over the past year. Studios in Zone 2 are the only property type to have seen an increase in rental prices in the past year, Foxtons says.
“Although total returns across London are lower than in recent years, a return of 11.2 per cent on investment still makes residential property a very profitable and attractive asset class, outperforming many other investments” claims the agency.