October 12

Are Lower Rents Really Happening In London?

Video Transcription:
Should landlords be expecting to negotiate lower rents due to renewal during this period? The answer is yes but it depends. So what I mean by that is this if you look at what happened when we’re in lockdown a lot of stuff you know rent started dropping but that was because what happened the service accommodation which was massive in London all of a sudden they couldn’t get anyone. There was no travel, there was no one moving, there was no one taking those things you know and a lot of them said okay I’m gonna get hospital workers but they didn’t need the hospital workers in the end. 
The service department industry I mean you know I’ve heard up to 60% of those have now gone on to the regular market. So that’s a massive flood of property that have come onto the market and certainly where they had lots of service apartments you know that’s where we’ve seen those drop in rents. But we’ve a lot of the I mean there’s just as many rents that have stayed the same you know gone up a little bit you know it hasn’t dropped dramatically but in some buildings and really it’s a building specific. So if you found that you had a lot of service apartments before what you found is your rents probably dropped you know 200, 300 you know dramatically but now what you’ll find once that demand once that supply is taken up then what you’re likely to have is actually the rents come back. So it really depends, I mean lettings is a week by week market. So if in one week there’s 10 properties and two of them get let per week let’s say so over the next five weeks but let’s say you’re number 10 and so on the fifth week another 10 come to the market now you’ve got 11 on the market you could be you know another. So it depends on that. Do I think that you should be expecting to negotiate lower rents. I would say probably in London let’s say 5% outside of London we haven’t really noticed much of a difference you know. 
But by the same token what we are doing in our new system is our new process where we’re actually going out we’re doing automated valuation models. We’re using an automated evaluation model we’re doing reports, we’re getting lots of research and that sort of stuff we’re able to see where your rent is compared to others in the building. Because a lot of the buildings we manage multiple properties you know we’re talking 5, 10, 20 you know even 30, 40 properties in developments and things so we can see what other people are getting and we can negotiate based on that. And so some of that data we’re using to send to the tenant say hey this is what we’re currently getting on these you know so we need to bring this up you know and we’re explaining it to them. And you know and part of it is we’re saying this is what we’re raising it but then we negotiate it down to you know whatever so it’s a negotiation as much as it is you know the fundamentals for that particular week by week market. Which all rentals is a week by week market you know supply and demand that sort of stuff. 
All right but there’s actually a lot of videos that I’m putting out on the letting side to talk on how we actually operate and how we do that. Because what we try to do is if that’s a realistic market rent we put it here and then we drop the rents. Now a lot of other agents like oh look at them they’re dropping the rents all the time. It’s like yeah we are because we start higher and we’re going down to where we think it is. Whereas a lot of agents will if you say you want 1,500 the market’s at 1,300  they’ll start your 1,500 and they’ll leave you until you come to them and say hey we need to get this rented. 
Hopefully that gives you a bit of an understanding. I think you may find that your rent drops depending on where it is and when it was and all that sort of stuff. There have been rent drops absolutely but not as dramatic as some of the news has been saying and certainly not as dramatic as some of the service departments that i’ve heard. Some of them haven’t even got their property back yet and the worst thing is because of the way they’ve done the tenancies you know they’re struggling to get the person into court to get them out. So hopefully that answers your question.


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