NO PLACE LIKE HOME

Falling rents and a glut of desirable properties are making London’s financial district more affordable for short-term residents. Is it time you made the move?

ANYONE TRAVELLING TO LONDON ON A regular basis will know that hotel accommodation in the UK capital can be expensive. According to a recent survey, average per night prices of hotel rooms are £131 (€151), and you can guarantee those won’t be the best places in town. It gets even more costly if you want to be in the heart of things – central London and its business districts are often the most expensive areas to stay in. But if you’re smart it can be easy to find cut-price accommodation, thanks to a glut of rental properties currently flooding onto the market.

This mass availability of rental property is great news for anyone who wants to find a short-term place to stay – and it’s come about because of Britain’s economic downturn. House prices have plummeted and sales are at their most sluggish for years, with popular buy-to-let locations suffering the most.

One of the most obvious victims of the downturn is Canary Wharf, which benefited greatly in the boom as banks and multinationals moved in. The area became a magnet for developers and a rash of expensive new-build apartments appeared, many of which were bought as investments.

But Docklands is now a showcase for what happens when the economy goes wrong. Large numbers of owners can’t sell their properties for a profit and are simultaneously being squeezed financially by falling salaries or job losses. As a result, local estate agents are seeing a marked increase in the number of owners desperate to rent their stylish Canary Wharf pads. The resultant glut is pushing rates down by between 10 and 30 per cent on last year and, for the first time in a decade, tenants rather than landlords are dictating the terms.

“The past year has been our best ever in terms of lettings,” says Vanessa Evett of Knight Frank’s Canary Wharf rentals office. “But a huge number of properties have come onto the market since the credit crunch started and rents have dropped by as much as 31 per cent over the past 12 months.”

Evett says many people have become what the industry refers to as ‘false landlords’. They are owners who wouldn’t normally consider renting but are doing so to cover their mortgage as they wait for the sales market to pick up. “We’ve gone from having about 140 rental properties on our books at any one time to 300,” she explains.

According to Evett, 75 per cent of Knight Frank tenants are European business people, mainly from Germany, Italy and France, with a smattering of Chinese and US clients. They tend to be young professionals in the 20 to 35-year-old demographic and many are on relocation contracts, short-term placements or internships with multinationals in Canary Wharf.

“Companies are increasingly downsizing their HR departments, so whereas corporate lets used to be big business, with companies taking control of where employees would stay, they’re now giving staff a budget and expect them to arrange their own accommodation.” This, says Evett, has made employees more focused on cost than they used to be. “People tend to stick to their budget – they don’t top it up as they may have done previously.”

Most tenants are looking for two-bedroom, two-bathroom apartments and can now expect to pay from £50 (€60) to £100 (€120) less per week than a year or two ago. Apartments near central Canary Wharf that would have rented in 2008 for £300-£350 (€350-€405) per week, for example, will now tend to go for £250-£300 (€290-€350), while properties that cost £500 (€580) per week have come down to about £400 (€460).

Everything is negotiable at the moment, according to Angus Edy of local lettings agency Movello. “At the end of a tenancy period rents used to go up by about five to seven per cent. Now tenants are able to negotiate rents down,” he says, “and there’s a bigger turnover of tenants than in previous years too. Landlords may not want to negotiate but they’re having to.”

Edy says the lower prices mean people are also now considering areas that they may not have been able to afford previously. “People are tending to move into central Canary Wharf and it’s now the outlying locations that are suffering.”

He believes companies looking to save money could quite easily capitalise on short-term rental opportunities. “It definitely could be cost effective to rent and we have seen a dramatic increase in companies looking at short-term lets as a way of saving on hotel bills.”

One of Edy’s clients regularly brings staff to the UK from India in order to train them and is currently renting apartments to reduce its costs. “Apartments aren’t just cost-effective at the moment,” he adds, “they are more flexible and spacious than hotel rooms too.”

Many of Canary Wharf’s most sought-after addresses include iconic buildings, such as the Pan Peninsula and the soon-to-be-completed Landmark Tower, which may have been out of reach to many prospective tenants a few years ago. Agents are also reporting increased enquiries about properties in Millennium Harbour, Canary Riverside and West India Quay.

High-end developments are proving more attractive to overseas renters because they not only offer easy access to Canary Wharf’s business district, as well as central London, but also provide a range of hotel-style facilities. These can include room service and a concierge, bars, gyms and, in the case of Pan Peninsula, even a private cinema and business centre.

However, Vanessa Evett says many short-term rental properties don’t supply televisions or stereos, and won’t necessarily have phone or internet connections in place. So you need to check that an apartment offers the right set up for your needs before you sign a contract.

Evett is always surprised how few business people request properties with managed services, such as linen changing and cleaning. She says these contracts are invaluable if you’re only flying into the city a couple of days a week. “Having a management agreement also means you won’t need to deal with the landlord to get anything fixed or changed,” she explains.

For anyone wanting to engage a property as a short-term let, the main barrier is generally the traditional 12-month lease, which usually has a contractual break at six months for a tenant to give notice. However, even these rules are changing as tenants take the upper hand.

“There has been so much new build in Canary Wharf that the market has become saturated with choice,” says Dawn Sandoval of Alan Selby & Partners, “so there has been a significant drop in rents. We have tenants who want to renegotiate contracts every six months, if not earlier, instead of waiting for the 12-month leases to end, as they used to. Some are even moving every six months to get a better place at a lower price.”

Sandoval has many landlords whom she claims are “desperate”, and prepared to drop rents by as much as £75 (€85) per week to get tenants. “Though some rents in popular buildings were possibly too high to start with,” she adds.

Her company still has some business from corporate lets, but she admits that there is less than during the boom. “So anyone looking for a short-term let could well get a good deal now,” she says. Sandoval also has corporate clients who are buying several flats at knock down prices in order to use them for staff residences, therefore cutting out hotels altogether.

However, Sandoval advises anyone thinking of renting to keep an eye on the market. “When the situation stabilises and sales pick up you will see a rise in rents. So if you’re considering renting and you think you might need the property for a long period you might be better off signing a 12-month contract. You lose flexibility but you’ll get lower rates for that year, whatever happens with the economy.”

WAPPING

This riverside enclave is popular because of its convenient location, which offers easy access to both central and southeast London. Local attractions include St Katherine’s Dock, with its swanky marina, and historic Tower Bridge and its nearby bars and restaurants. Wapping has a tube station and Tower Hill and Limehouse DLR stations are also just a short walk away.

Agents report that Wapping has one of the longest tenancy periods in London, due to the area’s popularity, which means there’s often a shortage of accommodation. Luckily there are plenty of glamorous waterfront developments vying for renters’ attention, including warehouse conversions and stylish new builds.

Average rents on a one-bedroom flat range from £300 (€350) to £500 (€590) per week, depending on proximity to the river. One of the most popular places to live right now is New Crane Wharf, a character conversion project offering spacious and high-spec interiors. Rents start from £300 (€350) per week.

ROYAL DOCKS

Not only is Royal Docks on City Airport’s doorstep, DLR connections will get you to Canary Wharf in 10 minutes and into central London in about 20. Once a run-down wharf, the Royal Docks has undergone complete renovation and boasts the Excel exhibition and conference centre plus a wide range of accommodation suitable for short-term renting.

Properties don’t tend to be as glamorous as the high-rise towers of Canary Wharf but many still have good facilities and services, and are often cheaper to rent. Towards Barrier Park it’s possible to find two-bedroom properties at under £250 (€295) per week, rising to £500 (€590) per week nearer to the Excel Centre, depending on the property and length of rental period.

One of the best addresses here is the Capital East development, right next door to Excel. Apartments offer amazing views over the docks and Canary Wharf and there’s a concierge service and gym. Short-term lets start at £400 (€470) per week for a one-bedroom property.

WORDS BY LAURA LATHAM

 

 

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