Rise on demand for one bed rental properties in London

Rising rents are forcing many London tenants to search for smaller properties, creating fierce competition for one bedroom flats, it is claimed.

Where traditionally the majority of city workers have opted for a two bedroom property, giving them a spare bedroom or a study, property consultants Cluttons has seen a sharp rise in demand for one bedroom apartments as tenants try to keep rental costs down.

The usual cycle of workers upsizing to a larger property after a year or so has stalled, as many are deterred from moving by rising rental prices and a desire to keep their outgoings low, as concerns over job stability continue.
   This shortage of one bedroom properties has been exacerbated by the continuing difficulty in obtaining mortgage finance, which is preventing many tenants from purchasing their first home.

‘The combination of a difficult mortgage market, rising rents and general economic uncertainty has put significant pressure on the lower end of the prime London lettings market,’ said Lynn Hilton, partner for residential lettings at Cluttons.

‘Previously one bedroom properties were often seen as pied-à-terres or short term homes, but the market has shifted so that single professionals and couples, who would have previously chosen a two bed, now see the spare room as an unnecessary luxury,’ she explained.

'Young professionals arriving in London to take up positions in the City have noticeably lower budgets. They used to take two bedroom apartments at £550 per week, but now one bedroom properties costing in the region of £350 to £400 per week are in much greater demand,’ she added.

Meanwhile, the latest data from Land Registry’s flagship House Price Index shows property increased by 1.5% year on year in December which takes the average property value in England and Wales to £163,814. The monthly change from November to December was a price fall of 0.2%.

Five regions in England and Wales experienced increases in their average property values over the last 12 months. The region with the highest annual price change is London with an increase of 6.2%. London also experienced the greatest monthly rise with an increase of 1%.

The region with the greatest annual price fall is the North East, down 3.3%. The South West region experienced the most significant monthly price fall, down 1.2%.

The most up-to-date figures available show that during October 2010, the number of completed house sales in England and Wales dropped by 15% to 55,964 from 65,736 in October 2009.

The number of properties sold in England and Wales for over £1 million increased by 1% between October 2009 and October 2010, from 572 to 579.