Wandsworth Rental Market Trends

We Are In A Recession

It was officially announced last week that the UK is in recession for the first time since 2009, and although this has come as no surprise to anyone, it's still not good news.The Office for National Statistics (ONS) said that gross domestic product (GDP) fell in the second quarter of 2020 by 20.4%, which is the biggest quarterly decline since records began in 1955.

As mentioned, this is no huge surprise due to the nationwide lockdown caused by the coronavirus pandemic, which meant almost every industry ceased trading for a period of time, including the property market.

However, the property industry has certainly been more fortunate than others. After being one of the first industries to open up in May, it has remained resilient and we saw positive growth and movement from the pent-up demand with more viewings, instructions and offers accepted back in May. The stamp duty holiday, announced in July, will also entice investors to get back into the rental market.

How has the Rental Market fared in Wandsworth?

Over the summer holidays we would normally expect to see more families moving before the start of the school term in the autumn, but this hasn't been as evident. In addition, corporate companies have exercised a more cautious approach and relocation agencies haven't been registering the requirements of their international clients becasue they have been hardest hit with shutdown and the corporate world. The supply of rental properties from the pent-up demand back in May has also come down this maybe attributed to the successful re-negotiation of rent of existing properties between landlord and tenant. As such current tenant demand and rental supply is lower from previous months in May, June and most part of July. The overall picture since lockdown on average rents in the area has come down to around 10%. Any landlord thinking they can get the same rent as they did before lockdown better think again.

Viewings have also been slow having said that August is a quiet month, even in a good market, as many people are away on holiday. And even though Coronavirus is amongst us this hasn't restricted people from travelling abroad to sunnier shores.

I would expect September to pick up with more applicant registrations and tenant demand we are already seeing more  international students registering. As they have more confidence now that most universities are going to be running face to  face lectures which wasn't looking likely when lockdown began.

What is the biggest concern for the lettings market in Wandsworth?

The Wandsworth letting market is resilient than most areas in London including Prime Central London (PCL) or Zone 1 where  rent reductions are on average up to 15%. The only challenge it faces is the same as any other market and that is the impact of increased unemployment. Especially when the furlough scheme ends - which has been the lifeline to many employers and  employees and this all comes to an end by Oct 31.

Therefore, the real impact is still awaiting us in the winter months  from the possibility of a further implosion caused by another national lockdown. It certainly wont help Landlords and tenants who are are already facing financial hardship. As it stands Landlords are unable to start court proceedings to evict tenants who haven't being paying their rent since the start of lockdown until after the 20th of September. And who knows the timeframe may be extended due to anti - landlord lobby groups putting pressure on the government.

In summary the letting market trend in Wandsworth was one of high tenant demand when lockdown was partially lifted back in May. New instructions have slowed down since many existing tenancies have had rent reductions. Overall, the average rents in Wandsworth have come down on average up to 10%. When you consider the economy has shrunk by 22% in the first & second quarter. As officially declared by the (ONS) it would appear that the Wandsworth letting market on reflection has fared quite well against the MACRO impact of the economic downturn.

                                                                    What Happens Next? 
This does depend on different factors and although it’s not good news that we’re officially in a recession, like everything else this year, the long-term effects are still unknown. This recession may not affect the economy like previous ones. However, we will just have to wait and see there is still the Brexit issue that a no deal presents to the country if the powers that be cannot come up with an agreement by the end of the year. Having said that a deal could be struck, there may not be another nationwide lockdown and the economy could recover a lot quicker. Which is the best case scenario for all concerned. Notwithstanding the fact that this would have a positive impact on tenant demand. And that is the key part to the whole sum parts of this equation.

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