A prominent London buying agent and property consultant says the slowly improving supply of rental property means more tenants are now able to shop around for improved deals.
Jo Eccles says: “Record rents and a shortage of supply earlier this year have resulted in many tenants being forced to pay more than they might have otherwise been comfortable with.
“But dynamics in the rental market are now starting to shift as the supply of properties increases - driven in part by ‘accidental landlords’ who are holding off from selling surplus properties until conditions improve in the sales market, opting to turn to rentals in the short to medium term.
“Many tenants who have been locked into rental contracts at higher rates are now taking the opportunity to review their options and shop around for alternative properties which might offer better value for money.
“Landlords who are keen to sell in the medium term are keeping their options open by agreeing renewals or new tenancies with six or 12-month break clauses in their contracts. If conditions in the sales market improve during 2024, they will be ready to move quickly.”
Eccles, founder and managing director of buying agency Eccord, has also expressed pessimism about the capital’s high end sales market.
She says: “The run up to Christmas is usually a busy period in the prime central London property market, but the lack of urgency that has characterised most of 2023 continues and it feels as though activity has slowed earlier than usual.
“Yet we have seen a mindset change in the past weeks, as clients look ahead to next year. Buyers who have been sitting on the side lines are increasingly embracing a ‘life goes on’ attitude and several are now proactively putting plans in place to commence property searches in Q1 and Q2.
“As well as being committed to embarking on a new chapter of their lives, they are reassured by the fact that prices for best-in-class property have remained stable throughout this period and significant price falls in this segment of the market are now unlikely.”
But she cautions that the uncertainty created by the prospect of a General Election may well cause “some disruption” in 2024 but she says this time the main political parties are more centrally aligned – “particularly after Rachel Reeves’ assurances that Labour’s Mansion tax policy has been scrapped. Whatever the outcome, buyers aren’t expecting any major property-related policy changes in either direction.”
Eccles notes that transaction volumes are down approximately 25 per cent year on year, with activity in her prime London markets driven almost entirely by trophy home purchases or needs-based buyers moving due to new jobs, expanding families and school places.
And she adds: “International and pied-a-terre buyers have been present, but many haven’t deemed purchase opportunities or discounts compelling enough to transact. This has reduced activity within the discretionary ‘flats’ market. Buyers are grappling with the dilemma of best in class versus perceived value for money.
“Best in class properties across the board have continued to achieve strong prices which is at odds with discount seeking buyers, who must decide whether they want to underpin their investment with best in class or achieve a discount on a slightly less coveted property.”