Market Update May 2019
The phrase ‘life goes on’ seems to most aptly sum up the market this month. Contrary to popular belief, we have seen a noticeable increase in activity taking place across the board, as fear of the ongoing political uncertainty appears to be waning. We’ve included below some examples to illustrate this.
On the lettings side of the industry, the big change is the lettings fee ban – amongst others– which comes into effect on the 1st June. We have of course informed our landlords ahead of these changes to ensure that they are aware of the impact.
Below are some of the rental trends we are seeing within the portfolio of nearly 200 rental properties we manage for landlords.
Our expert team is on hand to discuss any property requirements or questions you may have so please don’t hesitate to contact us.
Best wishes,
Jo Eccles
Managing Director
Eccord
More activity in the market, especially in the £5m – £10m price range
Despite the new political uncertainty brought by Theresa May’s announcement that she will be resigning in June, the increased market activity we noted last month remains.
For example, we are involved in the managed sale of a client’s property in Chelsea. Having been on the market for nearly 9 months at £7.95m, we have now received an offer from a domestic buyer who already lives locally and is looking to downsize. It is yet to be agreed but it is certainly a significant step in the right direction.
Equally, another British client of ours is looking to sell their home for £9m as they are spending more time in the USA and they have found a property out there which they would like to buy.
We are seeing sellers remain pragmatic about the price levels they will accept and are very much adopting a ‘life goes on’ attitude.
The sentiment with our buying clients is equally pragmatic. We have seen a number of clients engage our services, having had initial conversations with us several months ago, and they are now ready to proceed. Their motivation is also largely down to ‘life goes on’.
The two main categories of domestic clients we are currently representing are those who are in rented accommodation and looking to purchase before the end of their lease, and those upsizing and looking to take advantage of doing so in a softer market.
Of our international clients, most are concluding that they cannot time the market perfectly and they remain positive about the long-term fundamentals of London including its culture, nightlife, school system, strength of property law and so on. Each client has the intention of using their London property themselves or for their children in the long-term and our buying team has a busy summer ahead with a number of overseas clients already scheduled to be in London with the intention of acquiring property during their stay.
There is still a significant proportion of would-be-buyers remaining on the side lines but it is interesting to note that more are deciding not to wait any longer. It is certainly quite a civilised market to be dealing in right now with less competition from buyers, but having access to off-market properties and meaningful pricing data remains key to buying well.
Rental market remains a safe haven for those who are still not yet ready to commit
We are fortunate enough to have detailed insight into the rental market and what is driving tenant behaviour, through our portfolio of rental properties which we manage for landlord clients.
The properties we manage range from £350 per week up to £50,000 per week – so we have a detailed view of the market across the spectrum.
We have seen some tenants moving due to life changes (relocating, upsizing, downsizing etc) but the majority are staying put.
In the mid-market, many of those renewing are requiring to do so on flexible terms such as rolling 2 month notice periods, just in case there is further change on the horizon.
At the prime and super prime end of the market, we are seeing a lot of 3 year tenancy terms. Many of these are with would-be-buyers committing to renting as an alternative to buying either because they have concerns / hopes for further price falls or because they can’t commit to a purchase long term.
We believe London is still a great place to own long term investment properties and interestingly, only 2 of our landlords have sold their properties since the Brexit vote. The rest remain committed to holding for the long term, which we believe reflects the firm belief that London will continue to remain one of the most attractive global cities in which to live and invest.
