For those in the market for a large or high-end rental in prime central London, there are more than a few options. But for those in search of smaller, more reasonably priced pads, things are tougher according to a report from Rokstone, a London-based real estate agency.
Monday’s report indicates that 70% of rental listings in the West End area of the city are for properties renting for £2,500 to £20,000 (US$3,315 to US$26,500) or more per week. That leaves just 30% of listings for apartments in the £500-to-£1,200 (US$663-US$1,600) per week range, the report said.
The survey included the West London areas of Marylebone, Bayswater, Belgravia, Mayfair, Regent’s Park, Fitzrovia, Soho and the Hyde Park Estate. It looked at rentals listed this year between March 1 and Aug. 31 and priced from £500 (US$663) per week up to £40,000 (US$53,000) per week.
"The luxury lettings sector is well supplied, [but] it is the entry-level part of the lettings market in Central London that is massively undersupplied," said Becky Fatemi, managing director of Rokstone, in the report.
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One of the reasons there are so many larger and luxury properties on the rental market now is because owners have not been able to sell, according to Rokstone. Owners of flats renting for more than £10,000 per week (US$13,300) are choosing to rent them out rather than let the apartment stay empty.
"Currently around six out of 10 inquiries I am getting from my property developer clients is asking us to provide them with bespoke lettings services for luxury property they are holding on their balance sheets," Ms. Fatemi said.
The imbalance between the lower- and higher-end listings is also due to an uptick in new developments and a rise in taxes for buy-to-let landlords, the report said.
This abundance of luxury listings has caused a 2% to 5% decrease in rents over the last year, according to the report.
The balance between the two sectors should be more like a 50/50 split, Rokstone said.
The lower-end of the rental market in this pricey area is driven by tech and media executives, wealthy students from overseas and affluent young families, the report said. But many "ordinary Londoners," who may have been West Enders, are moving further out to find affordable housing, thus increasing commuting time.
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In addition, cheaper apartments that are listed are snapped up quickly.
"There is a significant pent-up demand for entry level rental properties across London’s West End priced from £500 to £1,200 per week," said Olivia McSweeney, head of lettings at Rokstone. "Studio and one-bedroom flats, if priced and presented well, can let within a few days."
The supply imbalance doesn’t look like it’s about to correct itself, according to the report. A push toward lower-end development may be needed, Rokstone said.
"Landlords and professional build-to-rent developers need to be targeted and looking at supplying the lower end of the lettings market," Ms. Fatemi said. "This is where there are really lucrative opportunities at present."