As ever more developers are building luxury apartments in fringe parts of London, we examine whether build to rent prices are likely to be sustainable.
With developers building rental apartments and charging above market rent for access to amenities including gyms, swimming pools, and a full concierge service. However, most of these apartments are rented at well above the market rent for area which has made some analysts dubious that people will pay such large sums for a less desirable location. However, the acute housing crisis in the UK, and especially in Greater London, means that these new developments will continue to be built in large numbers with developers confident that young professionals will prove willing to pay above market rent for more luxurious living space.
The typical rentals on these properties which are being built in fringe areas including Acton, Deptford, and Stratford. The rents quoted for schemes in these and other similar location for a two bedroom apartment vary between £1,650 and £2,100 per month which is an average premium of 35% on local markets. As a result, developers have to convince people to either pay more money than they are used to for their rental accommodation or persuade people already renting in Central London to move to fringe areas. This could prove difficult as people value location and proximity to friends and family as one of the most important factors when deciding where to live. However, wit the shortage of homes in London for professionals to rent, there could be a market amongst people who can no longer find the standard of accommodation they expect in Central London. However, there are still multiple new developments being built throughout central London, so these fears of a central London housing shortage may prove to be overstated in the long term.
Our Head of Residential Lettings Julia Garber commented on the situation, stating: “Here at Robert Irving Burns, we have observed decades of change within the London lettings market, it is conceivable that these new luxury apartments in fringe area will be economically viable in the short to medium term. This is due to the lack of affordable housing in London as well as ever more well-heeled professionals searching for a place to live with all the amenities. This means that prices will continue to rise in these less fashionable parts of London for as long as demand outstrips supply. Whether this demand will continue to rise indefinitely depends on a variety of factors, including London’s position as a global city, as well as government plans for building new houses. This means that it is impossible to predict in the long term whether these build to rent properties will continue to thrive. However, within the next few years, we expect to see far more of these developments as more and more people look to make this vibrant city their home.”