Over the last three years, rental values from prime residential property in London rose by an average of 23.1%, representing the strongest three-year period of growth in rents for a quarter of a century. However, the tail end of 2023 marked a change in market conditions – rental growth is slowing and pricing is becoming more sensitive.
To help navigate this shift in market sentiment, here are my top tips for landlords.
Be strategic with your pricing
In a more considered rental market, launching a property at the right price is key to attracting the right tenant. While a high valuation might seem attractive, it may represent the worst advice and produce the poorest outcome.
Speak to agents who really know the local market and whose strategy is justified through successful, comparable lets. Ask them what stock levels are like for properties similar to yours and the percentage of prices being achieved, as well as the average time it takes to secure a tenant.
In the current market, the best approach is to launch with an attractive price, or one that is slightly below market value, in order to conjure attention and encourage competition. This method, while it may appear counterproductive, has produced some excellent results, encouraging best and final bids and offers over the guide price.
Consider a price reduction
After years of consecutive growth and an increase in mortgage rates, it’s understandable that landlords may be less willing to drop the guide price on their property – especially if they have achieved more from previous tenancies. However, if your property has yet to command any offers, it might be worth considering a price reduction.
While this scenario may not be ideal, it can pay dividends. For example, we dropped the price of a two bed apartment in Bayswater by £200 per month and subsequently drove a huge amount of interest before achieving an offer over the original guide price, prior to the reduction.
Turn-key appeal
It’s always good to stand out from the crowd, especially when there’s more properties for tenants to choose from. Homes presented in good condition and finished to a high standard typically attract the widest pool of tenants and achieve the strongest outcomes.
Updating windows, kitchens and bathrooms will have a big impact on a property’s overall appeal. Although these alterations can come with a heftier price tag, this will ultimately be reflected in its value and yields, as well as meeting tenants’ expectations.
Be open to compromise
With a more ‘normal’ rental market in full swing, landlords should expect offers under the advertised guide price. For those properties sitting on the market a little longer than anticipated, we’d always encourage an offer to be considered carefully by a landlord. Your agent will be able to advise you on how an offer fares compared to other rental values being achieved for similar properties.
Flexibility is key
Like tenants, landlords should be willing to negotiate too; and this doesn’t always need to be on price. Landlords should offer some flexibility, whether that’s on tenancy length, move in dates, tenant profile, allowing pets, or simply making a few home improvements in order to get the deal over the line. This will not only help let your property to a good tenant, it is likely to help you achieve that all-important guide price.
Further information
Contact Guy Spencer
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