We expect the decrease in rental values to continue into the winter, but the declines will narrow and eventually stabilise before rents begin to rise in 2021 as the marked imbalance between supply and demand recedes.
I’m pleased to report that we had a busier than usual August dealing with the late demand from the summer COVID restrictions. Whilst we have been pleasantly surprised at the number of new tenancies since the last market update, the effect of travel restrictions and the government recommendations of working from home is now clearly visible as these changes filter through into the property market.
With the majority of professionals being told that they are no longer required to commute many have taken this opportunity to move away from central London for more space and reduced rents. Furthermore universities are offering online courses meaning the seasonal overseas influx has not materialised. The British Council has estimated that UK universities will have nearly 14,000 fewer new enrolments from East Asia in 2020-21 compared to the previous academic year. These two factors along with the lack of movement has created a surplus of available apartments which is creating longer void periods than we have become accustomed to but thankfully these are slowly shrinking.
As the increased levels of stock linger, there remains a need to ensure that properties are looking their best in order to stand out from the crowd and many Landlords have chosen to reduce rental price expectations to minimise void periods in the hope of securing a long term tenancy to tie them over for at least a year when the market is expected to have recovered and a sense of normality has resumed.
We expect the decrease in rental values to continue into the winter, but the declines will narrow and eventually stabilise before rents begin to rise in 2021 as the marked imbalance between supply and demand seen during much of 2020 recedes. Demand in the rental sector will also be boosted should uncertainty around the economic impact of the pandemic continue to grow.
At Plaza we ensure that we are up to date with all the changes in legislation and are able to give sound, honest, advice to both our clients and applicants on the current market so please don’t hesitate to give us a call should you require any further information about the current market conditions, or are interested in the services that Plaza has to offer we would be very pleased to assist.