London one and two-bed rentals tumble in popularity
Average rents for a London three-bed property amounted to about £2,690 a month last year, 40% higher than properties with one less bedroom, the National Rent Review from buy-to-let lender Landbay found.
While rental prices of those properties remained largely flat over the last year, those of one and two-bedroom properties got cheaper, the research found. Two-bedrooms fell 0.69% in 2016, down some £160 in rent payments in a year, while one-beds dropped 0.32% in price.
Landbay suggested the reason for the price drop was London had a greater available supply of one-beds, and particularly two-beds, than of larger homes.
“Tenants that have more two-bed properties to choose from will be willing to pay less in rent, which goes some way to explain why properties of this size have seen the greatest decline in cost,” chief executive John Goodall said.
At the same time, for tenants the question of upsizing has become more significant, as they tend to rent for longer and are more likely to have growing families before they have secured their first home, he added.
The average rents in London, according to the study, were £1,455 for a one-bed, £1,926 for a two-bed and £2,690 for a three-bed. Outside of London the uplift in rent between sizes of properties was far less at 19% between one and two-bed properties, and 15% between two and three-bed ones.
Goodall said: “In London, where space is already at a premium, a relatively well-served two-bed rental market means those looking for more space now pay dearly for that extra bedroom.”
The government recently committed £7bn to build 200,000 starter homes, which Goodall said was a “step in the right direction”.
But he cautioned: “We mustn’t overlook the growing demand for larger rental properties, both in the capital and across the country. For landlords, the opportunity cost of offering a three-bed property in a London market crowded with smaller properties is clear; a 40% uplift in rent received for a house that is likely to have no more than 30% more living space.”
Landbay recently launched ‘Rent Check’, an online tool harnessing UK-wide data from its monthly rental index, allowing landlords to compare their own rents against others with the same number of bedrooms in their area.