Cluttons has given its latest lettings market snapshot for London, with an upbeat assessment of current and future demand.
The agency say the central London lettings market recovery has picked up pace in Q3 of this year, with demand driven by corporate tenants returning and executives in the City and Canary Wharf heading back to their offices.
The sub-£1000 per week market in particular is extremely active, driven by graduates starting jobs, the opening of universities, and the return of international students.
Cluttons claims that demand is now exceeding supply and leading to offers of five to 10 per cent over asking in some cases.
James Hyman, the agency’s head of residential, says: “What is remarkable about the recent correction in the lettings market is that it has happened over such a short period of time, all in Q3.
“Demand is now where, if not higher than, we would expect the market to be at this time of year in a 'normal' year. This demand is not just for short lets either, renters are looking to secure a minimum of two years rental which indicates that they feel secure in their jobs and think that rents are only going to go up in coming months.”
He feels the largest impact on rents has been the return of the international students - this alone has increased rents by around 11 per cent in areas such as Kensington and Chelsea.
But he tempers his enthusiasm by saying: “Despite this good news, we are not yet seeing the return of the buy to let landlords just yet as the yields are still not good enough.
“Once you take into consideration there is now no tax relief then capital values need to fall further to entice them back.
“Currently the average yield in most central areas is 2.5 per cent and what landlords want is 5.0 per cent. BTL landlords need values to fall at least another 15 per cent to entice them back into the market” he concludes.