Why every inch matters in the prime lettings market in London

By HUDSONS | 26th Oct 2016 | Landlord Advice

The capital is one of the prime lettings markets in England, shrugging off the credit crunch and continuing to surge ever higher as demand rises for quality properties.

2015 has been no different with rent continuing to climb across London, but there’s been a distinct line drawn between the fortunes of big and small properties.

Small and perfectly formed

Comparing the different types of properties, flats in London have stood out as the top performers with a surge in year on year value relative to the rest of the market. Flats have seen an increase of 2.1% in London with houses and other properties, by contrast, notching up a paltry 0.3%.

Real estate specialists have reported that a similar trend was being repeated across the whole of the city with smaller, less expensive properties commanding the greatest levels of growth.

Small but perfectly formed flats like this one in Hampstead, London are proving a sound investment


The biggest winners were properties where the rent was set at £500 per week or less, with hikes of 3.8% seen in prime London. This compares to a rise of 1.7% for London rental properties with a rent of between £500-£1000 per week and just 0.1% growth for properties with rent of £1000 per week or more.

Part of the reason for the rise in smaller properties has been attributed too much tighter corporate budgets with those relocating to the city being given far less to spend on settling. This has shifted the emphasis away from larger townhouses in more traditional postcodes with employees either opting to downsize or moving to different districts.

Size matters

The figures back up the theory that demand for smaller properties is higher than it’s ever been, with the value of even the smallest spaces rising far more quickly compared to the larger lets.

Up to Q3 of 2015, studio flats were top of the charts with a year on year increase of 4% compared to 0.1% shrinkage for properties with six bedrooms or more. Similar trends were seen quarter on quarter too, with 1 bed roomed flats just pipping studio flats for the honours of top space. Once again, six bedroom properties performed poorly with a fall of 0.6% compared to a rise of 0.7 and 0.8% for studio flats and one bedroom flats in London respectively.

Studio flats like this one in Islington are proving especially popular



Overall, growth in rental rates was seen in properties from studio flats right up to those with four bedrooms while five and six bedroom homes took a small tumble in the last 12 months.

In terms of square foot value, studio flats and 1 bedroom flats are considered to be almost on a level footing with a 6 bedroom luxury home. Two, four and five bedroom homes were the least valuable, trailing behind all of the others in their worth per square foot.

Location, location, location

When analysed in terms of location, east and prime north London were head and shoulders above most other areas, with rent climbing by 4.5%. This compares to a 0.9% drop in the prime locations in west London.

Unlike elsewhere in London, east and north London saw universal rises in rent, even in larger properties. Rents of more than £1000 per week in the north and east regions soared by an eye-watering 7.2%, the highest increase overall.

Analysts have suggested that these distinctive patterns show that tech companies are driving the market in the key areas, preferring the versatility that renting provides compared to the inflexibility of being tied to a purchase. The need for a well-established post code has been pushed aside in return for converted warehouses, open plan living and a vibrant local community.

Image Credits: A Thrifty Mrs and MoyMoyzai