London Central Portfolio, an investment consultancy, says the capital’s prime central area is seeing a demographic change as younger British tenants take advantage of reducing rents.
Andrew Weir, chief executive of LCP, says: “The effect of [Coronavirus] travel restrictions is now clearly visible as these changes filter through into the profile of our tenant base. It appears that the gap left by a smaller pool of high net worth overseas students has been happily filled by ‘home grown’ tenants, previously unable to compete.”
The British Council calculates that UK universities will have nearly 14,000 fewer new enrolments from East Asia alone in 2020-2021 compared to 2019 - many of these gaps will be in London, where most students from East Asia have traditionally studied.
“Less demand and reduced rental prices have created a space and means they are now in a position to live within central London. How long this will last is difficult to predict but it currently appears to be set to remain in place until spring 2021” explains Weir.
He says there is still a surplus of available apartments which is creating longer void periods than before, and he repeats advice from many agents operating in Prime Central London when he says: “There remains a need to reduce rental price expectations to minimise void periods for vacating tenancies.”
More encouragingly, he says existing tenants do not appear to be actively seeking discounts on renewals; 81 per cent of LCP renewals in the last quarter have been negotiated at passing rents, with minimal discounts requested.
“This highlights the importance of securing tenants with robust financial credentials, especially in the wake of the Coronavirus Act 2020 which further protected the rights of tenants from eviction” notes Weir.