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London rents lower now than in 2016 – but they have risen everywhere else

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London is the only UK region where rents are lower today than they were five years ago, according to Rightmove figures.

Rents across almost two thirds of the capital’s districts are lower now than they were in March 2016, meaning that the average London rent has fallen by 2.3 per cent.

The most significant fall took place in the past year, as rents dropped by 7.8 per cent on average.

London's falling rents over the past five years have been driven by renters moving away during the pandemic. In the past year alone, the capital has seen rents drop 7.8 per cent

London’s falling rents over the past five years have been driven by renters moving away during the pandemic. In the past year alone, the capital has seen rents drop 7.8 per cent 

All other regions of the UK have seen rental prices rise since 2016, with many having experienced double-digit growth.

Excluding London, average monthly asking rents across the country are at a record high of £982 per month, up 4.2 per cent since March 2020 – the highest annual rise since 2015.

The East Midlands has seen the highest rental increases, up by 19.3 per cent over the past five years, with asking prices rising from £733 to £875 per month. 

In terms of towns and cities, Wolverhampton has seen rental prices soar by 35 per cent with rents increasing from £631 to £855 per month.

Walsall, Bradford and Liverpool have also seen asking rents surge, rising by 32 per cent, 29 per cent and 28 per cent respectively over the past five years. 

What about the past year? 

The challenges posed by the pandemic appears to have encouraged many renters to spurn London in favour of the regions.

This increased demand, coupled with a lack of available rental properties in many areas outside the capital, has continued to push asking rents upwards over the past 12 months.

The areas with the biggest rent rises outside London, according to Rightmove

The areas with the biggest rent rises outside London, according to Rightmove

The number of empty rental properties outside of London is down by 54 per cent compared to this time in 2019, whilst in London it is up by 19 per cent.

In seven regions, properties are letting at the fastest pace ever recorded, according to Rightmove. 

In the South West it is taking an average of just 14 days to agree a tenancy, and in the East of England it is taking only 16 days. 

Seven UK regions are seeing properties let at record speed, according to Rightmove data

Seven UK regions are seeing properties let at record speed, according to Rightmove data

‘Our data shows a stark contrast between the rental market in central areas of London and the market across the rest of the UK,’ said Tim Bannister, director of property data at Rightmove.

‘Agents are telling me that they don’t have enough rental stock to meet the demand from tenants in many areas, while in London there will be some tenants who have a lot more stock to choose from.

‘The frenzied buying and selling market is likely to be exacerbating the problem as well, as some sellers are moving into rental accommodation until they find the home they want to buy, adding further demand to already diminishing rental stock levels.’

What’s the advice for landlords?

Many landlords will be benefitting from the surge in rental demand – but there is always competition, for example to secure the highest rent or the best tenants.

‘Landlords need to ensure the property looks smart and fresh and has good wi-fi, and to keep any garden or outdoor space well maintained to attract the maximum number of tenants,’ said Lisa Simon, head of residential at property consultancy Carter Jonas.

‘If tenants are looking to negotiate then that provides an opportunity to review the length of contracts and secure longer term lets with an annual rent review, to take account of the fact that the market is likely to increase again.’

What’s the advice for renters?

With properties renting in record times, many renters are having to act faster than ever before to secure a home. 

‘My advice would be to always offer asking price with an earlier occupation date, and be prepared to offer more if it’s a property you really want,’ said Simon.

‘Landlords like the security of longer-term tenants, so anything over a 12 month tenancy agreement is going to be favoured. It’s worth thinking mid to long-term about an area you’d like to live in.’

What is happening in London?

The decline in rents is being driven largely by areas of Inner London, where average rents are down by 6.5 per cent compared to five years ago.

Outer London is faring much better, with rents up by two per cent since March 2016.

The biggest rental falls in the capital have been seen in Finsbury, where asking rents are 24 per cent down since March 2016, having fallen from £2,818 to £2,147 per month.

Barnes and Stockwell have also recorded 20 per cent falls in asking rents, while Notting Hill has seen the average drop 19 per cent from £3,517 to 2,850 per month.

The figures – although alarming for landlords – are good news for London renters looking to take advantage of lower prices and explore areas that may have previously been unaffordable. 

Areas with the biggest rent declines in London since 2016 according to Rightmove.

Areas with the biggest rent declines in London since 2016 according to Rightmove.

‘The events of the past year have had a big impact on rents in London, with the more central areas being hit the hardest as tenants are no longer tied to their workplaces and have been free to seek the larger properties and lower prices found slightly further out,’ said Richard Davies, head of lettings at Chestertons.

‘As a result, prices are the lowest we have seen for several years and represent incredibly good value for those tenants thinking beyond lockdown and looking to lock-in to a good deal.

‘As the country starts to open again, we expect growing numbers of tenants to return to the more central areas and anticipate that rents will quickly start to recover.’ 

What’s the advice for London landlords?  

London landlords may be tempted to hold out for the kind of rents they might have been used to achieving in the past, but the advice is to be pragmatic.  

‘My advice would always be to just get a tenant in the property – a discounted rent is still better than a long void period,’ said Naveen Jaspal, chief operating officer at online letting agent Mashroom.

‘Without a tenant in your property, you are liable for the council tax, the full mortgage and all of the utilities. 

‘Get a tenant in, even at a lower price – use a six to 12 month contract and then reevaluate the market at the end of the tenancy agreement.’

What’s the advice for London renters?

Whilst competition for rental properties is fierce across all other regions outside the capital, the London market seems ripe for a bargain at present.

‘Falling prices are often seen as an immediate win for renters, enabling them to secure a property for what seems like a bargain,’ said Jaspal.

‘But it’s important to remember that you shouldn’t take a place that you think you will be priced out of when the market returns to normal, as you will be putting unnecessary financial strain on yourself further down the line.’   

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Bloom secures planning for London ultra-urban warehouse developments (GB)

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Bloom has secured planning consent for two developments in central London. The developments are located in Hackney and Brixton and are the first to be carried out by Bloom for its €290.4m (£250m) ultra-urban warehouse joint venture with Angelo Gordon to acquire and develop sites in central London. In Hackney, on a site by the A12 next to 331 Wick Road, Bloom will develop two units, totaling 14,045ft², designed by Michael Sparks Associates. Construction will start next month, with completion expected in April 2023. In Brixton, at 146-156 Brixton Hill and Units 5 & 6 Waterworks Road, Bloom will develop five units, totaling 35,360ft², designed by Chetwoods. Construction will start in September, with completion expected in August 2023.

 

Both developments will be targeting a BREEAM sustainability rating of ‘Excellent’ and an EPC rating of ‘A+’ in accord with Bloom’s core sustainability objective to reduce greenhouse gas emissions through construction and operational efficiency. The schemes will include extensive urban greening through the implementation of green walls, green roofs, increased landscaping, bird boxes, and insect hotels to significantly improve the biodiversity; renewable energy in the form of solar photovoltaic panels on the roofs; and lorry, car, and cycle EV charging points to encourage sustainable and active modes of transport as well as enhanced power capacity to accommodate future EV transport technologies.

 

Tom Davies, co-founder of Bloom, said: “Our first two planning consents represent an important milestone for the Bloom team, which is working hard to deliver high-quality and design-led industrial and logistics schemes in supply-constrained inner London sub-markets”.

 

Sam McGirr, co-founder of Bloom, said: “These planning consents for well-located sites give us the opportunity to meet the high demand for convenience and speed from businesses, such as F&B delivery, post and parcel, e-mobility, self-storage and urban logistics and consumers in the local communities”.

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Could equity release be used to help more younger homebuyers?

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Younger first-time buyers could be given more financial help from the Bank of Grandma and Grandad, through the use of improved equity release products, a new report suggests.

The document written by Tom McPhail, of consultancy The Lang Cat, claimed that younger buyers are missing out because older members of their family are unable to satisfactorily tap into their property wealth.

Mr McPhail said: ‘Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations.

‘An equity release by grandparents of say £20,000 now, could be transformational for a 20 something struggling to raise a deposit and get on the housing ladder but would make only a very modest dent to the value of the grandparent’s house.’

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

The report acknowledged that equity release has endured a poor reputation in the past after customers suffered ‘severe’ financial knocks.

The sector has been criticised for encouraging people to take on debt, particularly later on in life.

There has also been other concerns about equity release, such as customers falling into negative equity where the value of a property is less than the loan taken out against it when house prices fall.

The report suggested that while the equity release sector has since begun to put ‘its house in order’, it is ‘still not perfect’ and some regulatory safeguards need to be strengthened.

It called for several issues to be looked at, including early redemption charges on equity release products.

It said that most providers apply a simple sliding scale of charges, for example 10 per cent in year on to 1 per cent in year 10.

However, it claimed that some providers apply an early redemption charge based on prevailing gilt rates at that time, putting customers at an ‘unfair disadvantage’.

This is because the fees are not transparent as there is no way a customer can know in advance whether they’d be liable for a charge and if so, how much. 

In the past, customers have also fallen foul of the small print on their equity release loans when it comes to early-redemption penalties – such as couples who must pay an exit fee unless both of them need to go into care.

The report also raised questions about interest rates on equity release products. It said providers should be consistent with their lending criteria and not move the goalposts after customers have taken out a loan, as this can make it harder for them to access a top-up loan in the future, potentially forcing them to remortgage. 

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

The report argued that equity release products could help people access their property wealth to help younger members of their family onto the property ladder.

Mr McPhail added: ‘Raising a deposit has become an increasingly significant barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations.

‘Releasing some of the equity in a property allows older homeowners to choose when and how they share their wealth with the younger generation.

‘This more targeted approach gives them greater control to use their assets to the maximum benefit at the point of need.’

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report's author Tom McPhail

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report’s author Tom McPhail

Equity release: How it works and advice

To help readers considering equity release, This is Money has partnered with Age Partnership+, independent advisers who specialise in retirement mortgages and equity release. 

Age Partnership+ compares deals across the whole of the market and their advisers can help you work out whether equity release is right for you – or whether there are better options, such as downsizing. 

Age Partnership+ advisers can also see if those with existing equity release deals can save money by switching. 

You can compare equity release rates and work out how much you could potentially borrow with This is Money’s new calculator powered by broker Age Partnership+.* 

 * Partner link

Jonathan Harris, of mortgage broker Forensic Property Finance, said: ‘Equity release has historically been viewed as a ‘murky’, high-risk sector, fuelled by minimal regulation, poorly-qualified advisers, only a handful of lenders and extortionately high interest rates.

‘Fast forward to today and we see a dramatically transformed sector, benefiting from strict regulation, highly-qualified advisers, multiple lenders and access to very competitive interest rates. 

‘Not surprisingly, equity release is now a viable and growing market for older borrowers looking to utilise the gains seen on property prices to bolster lifestyles, as well as pass on wealth to children when they need it.

‘Those considering equity release should make sure they understand the implications and involve family in any decision-making. It is always important to seek advice from suitably-qualified advisers.’

It comes as a separate report by Legal & General suggested that one in every £90 spent by retired Britons is funded by equity release.

It said that equity release funded an estimated £3billion in retirement spending last year, although it didn’t mentioned the money going to younger generations towards buying a property.

Instead, the report’s survey of 2,000 homeowners found that those with equity release have most frequently used the product to finance home improvements, at 26 per cent.

It said equity release is also being used to support costs such as medical expenses at 17 per cent, maintaining living standards in retirement at 16 per cent, and paying off personal debt at 16 per cent, for example paying off interest-only mortgages. 

It suggested that equity release is likely to play an increasingly important role in financing care-related expenses, with 19 per cent of prospective homeowners citing it as a consideration.

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Allianz Real Estate buys prime office building in Rome (IT)

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Allianz Real Estate, advised by Dils, has acquired an office property in the centre of Rome. The transaction, worth circa €175m, is one of the most important to have been carried out on the real estate market in Rome in recent years.

 

The building, consisting of eleven storeys, comprising nine above-ground and two underground, has a gross lettable area of circa 22,000m² and has undergone a major refurbishment, offering the highest environmental sustainability and energy efficiency standards (LEED Gold Certification). The strategic location, between the CBD and Termini Station, is enjoying great success, especially among corporate occupiers. 

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