London renters eschew luxury property in favour of regeneration homes
The past decade has seen record change across London. Previously avoided areas in London’s zone three and four are the new London property hotspots as regeneration continues its march across the city.
Not surprisingly, London’s rental market has transformed along with its property. The city’s new homes are now sought after for a new group of private professional renters who are turning to these regenerated areas, taking advantage of the improved transport infrastructure and gentrification.
The new generation of renters need to stay in London for work, and are either choosing to rent, or have been priced out of the London market. These renters are driven not by geography, but by the space and quality of their homes. They’d rather look outside central areas if it means finding the perfect space - after all, commuting is now easy from many of the regenerating areas.
Another factor in this shift is the slashing of corporation relocation budgets. Whereas before, corporate tenants coming to work in London’s financial sector favoured upmarket inner city areas like Belgravia or St John’s Wood, the new breed of international workers are less tied to these areas and are looking to stretch their housing budget. The same applies to tech workers, coming into the city on the back of the tech boom. They tend to be younger and more flexible, and also willing to compromise on location.
Luxury rental market slowdown
The top end of the rental market, where you can typically expect to pay upwards of £4000 a month, has recovered after a dip last year. This is due to wealthy would-be buyers choosing to rent instead of paying higher stamp duty on an expensive property purchase. All the same, rents in central London luxury homes are 12% lower than they were in 2012. This is thanks to owners of high-value properties waiting to see which direction London property prices will go before putting their houses on the market, creating a glut of luxury rental property.
On the other hand, smaller, less expensive one and two-bedroom homes have retained their rental values, with one bedroom flats the only property types to experience five-year price growth.
Property UK’s Mert Altinisik says the popularity and rentability of these smaller London flats makes them an excellent investment. “Property in London’s regenerated areas is experiencing a boom. Not only is it lower priced than comparable property in established parts of the city, it’s also in high demand by professional tenants looking for high quality property in locations with great travel links to central London and London City.”
He added that these renters typically look for the facilities that modern developments tend to offer. “New builds tend to have better facilities, like gyms, concierge service, shops and cafes. Professional tenants often won’t even consider a property without these types of lifestyle accoutrements.”
He also points out that while Londoners once coveted proximity to a tube station, times have changed. “You have Uber and apps to help you move around the city easier than ever before. Add this to new transport links like Crossrail and living in Zone 3 or 4 is no longer a problem.”