Foxtons gives upbeat report on London lettings market

Foxtons has given a relatively upbeat assessment of the capital’s rental market in its survey of the sector in 2018.

It says that with almost 175,000 tenants registered in 2018, the average number of registrations per new rental listings increased to just under nine, its highest-ever level. 

Last year also saw a significant decrease in the supply of new properties listed to rent: by the end of the year there were 13 per cent fewer properties available to rent than at the same time in 2017. 

“We saw an increase in the number of renter registrations over the course of 2018 compared to 2017 - eight per cent up [across all of London]. The numbers were particularly good for the fourth quarter which is traditionally a slower market. That coupled with less available stock is good news for landlords for the start of 2019” according to Sarah Tonkins at Foxtons.

The agency says London’s Zone 2 saw the biggest increase in tenant registrations with a 13 per cent rise in demand. Overall the stock of properties in that zone fell with 11 per cent fewer homes coming to market compared with 2017. 

Zone 1 saw the highest rental increases of 2018, specifically with larger properties with three or more bedrooms seeing the biggest hikes.

Gross yields for flats rose over 2018 from 4.5 to 4.9 per cent - but this is in contrast to annual rate of return, which slowed significantly to 3.6 per cent from 7.8 per cent in 2017.

Foxtons’ recent trading statement on its 2018 performance revealed its increasing reliance on lettings to help it stay afloat. 

It reported further small slides in both revenue and profits for 2018 but sales income in particular plummeted from £43m to £36m.

However, total lettings revenue for 2018 was £67m - almost unchanged from the previous year - and it was improving as 2018 went on; revenue in the final quarter from lettings was £12m, up four per cent versus the prior year.