A recent study has revealed that the price of renting a three bedroom house in London has increased and continues to do so. In contrast, both one bedroom properties and two bedroom properties are actually getting less expensive to rent. The primary reason for the discrepancy is the lack of availability of three bedroom properties alongside an increase in demand, thus allowing landlords to raise their prices.
The information comes from the National Rent Review which is a research study conducted by mortgage lender Landbay, who specialise in buy to let properties. Their research shows tenants will often willingly pay more than the usual price to secure a three bedroom tenancy.
Rent Differences Highlighted by Study
With a larger number of one and two bedroom properties available for renting, part of the study focused on why there was such a demand for the three bedroom properties. It seems that with tenants renting their properties for much longer nowadays – up to three years longer than just over twenty years ago – many renters are choosing to start families while still renting. An inability to get feet on the property ladder obviously fuels this element as well.
The Chief Executive Officer of Landbay, John Goodall, said of the results revealed by the National Rent Review:
“In London, where space is already at a premium, a relatively well served two bedroom rental market means those looking for more space now pay dearly for that extra bedroom.”
He also doesn’t believe that the government’s promise to build 200,000 starter homes, which includes special homes for buy to let investors, will be enough to meet the current demand for rented three bedroom properties.
London Suffering Huge Uplift in Rent Differences
Across the rest of the UK, there is not much problem as the difference between rents of properties with different amounts of bedrooms is more stable. For example, the average difference between a one bedroom property and a two bedroom property is 19% when you exclude data from the capital. Compare that to the 15% difference between two bedroom and three bedroom properties, again when excluding London’s data. However, the difference between the same types of properties in London is monumentally different.
The uplift from a London-based one bedroom property to a two bedroom is in fact double that of the national average for the same properties, while the difference between a two bedroom and a three bedroom property in the capital is even larger with an uplift of three times the national average.
Obviously this is all about demand, as the capital clearly has an abundance of one bedroom and two bedroom properties for rent, but the lack of availability of three bedroom properties could continue to be a headache for tenants for a long time to come.
