Tenant demand in the residential lettings market in central London is showing signs of slowing and landlords are looking outside the city for higher yielding investment, new research suggests.
The number landlords reporting a rise in tenant demand in the fourth quarter of 2016 fell by almost 30% points when compared to the same quarter in 2015, down to 17% from 45%, according to the report from the National Landlords Association.
The findings also show that 40% of landlords in the South East reported a rise in tenant demand in the quarter, the highest reported across the UK, which the NLA says indicates that tenants are increasingly looking to move out of central London to more affordable suburbs.
It also point out that the perceived drop in rental demand in central London coincides with a more conservative approach from landlords to purchasing property in the capital in the coming months.
Indeed, just 5% of landlords who operate in London say they plan to purchase more properties in the next quarter, the lowest across all regions and down from 15% from a year ago.
In contrast, the proportion of landlords operating in the North East who plan to buy in the next three months has almost doubled, up from 10% in the final quarter of 2015 to 19% in the fourth quarter of 2016.
The proportion of landlords in Yorkshire looking to buy has also jumped significantly from 10% in the fourth quarter of 2015 to 16% in the same quarter of 2016.
‘It looks like central London is simply becoming too expensive for most people, regardless of whether you want to buy, invest or rent,’ said Carolyn Uphill, chairman of the NLA.
‘For many tenants the practical solution of moving out of the city to more affordable suburbs with good transport links is becoming increasingly appealing,’ she pointed out.
‘In turn, it seems that landlords have been quick to respond, turning their backs on the capital and looking to other areas where the upfront cost of acquiring property is lower, and the potential yields to be had are higher,’ she added.