Guest blogger Adam Challis of JLL reviews the London Lettings market

15 September 2015 |

The prime lettings market has undergone an important shift in Q2 2015. Pre-election weakness affected both the sales and lettings markets, but this was reversed with the Conservative party win. Although transactions were not quite at the euphoric levels that some over-enthusiastic agents reported in the immediate election aftermath, prime markets are now rebuilding stock levels and should find moderate activity growth in Q3. However, the lack of stock continued to push occupiers into rental property. This was particularly notable for corporates, who alongside strong demand from students pushed up new lettings by 93% in June compared with 2014.

Rental growth remains modest, with would-be tenants staying price sensitive, aided by increased choice in the lettings market. Demand is also more likely to seek alternatives in fringe locations rather than pay perceived rental premiums.

New listings should be supported by improving new build supply, expected to peak in 2017. This will ease the general shortage of quality lettings stock available and continue to keep a lid on rental growth. With subdued value growth in the sales market, prime yields should remain stable for the medium term.