Since mid-2008, an oversupply of rental properties has characterised the Docklands lettings market, as ‘accidental landlords’ attempt to find tenants for properties they would otherwise have sold. To make matters worse, over this period, redundancies and a freeze on employment in the financial sector and ancillary industries have contributed to a fall in demand. The resultant drop in rental income has been keenly felt especially by investors who have purchased properties in the last few years.
During the summer months, demand for rental properties increases significantly and, despite predictions to the contrary, this year has been no different. Whilst this has not resulted in an increase in rents, we have noticed that prices have stabilised and landlords are now achieving a significant number of ‘asking price’ offers provided that they are pricing their properties realistically in line with the current market. This is in stark contrast to late 2008/early 2009 when tenants were making offers 10-15% below the marketing price.
The current level of activity is very good news for investors and, if the market remains buoyant for the rest of the year, prices should start to increase as demand outstrips supply. Historically, the lettings market slows down in November and December, but with sales volumes improving and house prices increasing for the second month in a row, we expect ‘accidental landlords’ to take advantage and sell their properties rather than seek new tenants when their tenancies expire. Given these conditions, we predict that rental prices will increase steadily throughout 2010.
Sharief Ibrahim, lettings manager of Felicity J Lord Canary Wharf