Developers in London are building flats that are too large for the rental market. By concentrating on what they think owner occupiers want, too many are building flats with several bedrooms – but the private rented sector is demanding smaller units.
London renters want studios, one bedroom and possibly two bedroom flats at around 650 square feet floor area, according to agents Knight Frank. But many apartments being built today are too large, with 650 square feet being splashed out on a single bed flat, with two beds often spread over around 1,000 square feet. And as a result, prices are simply too high for working young Londoners. Many cannot practically afford to pay more than £300 a week for somewhere to live in the capital.
“Renters are really stretched at the moment, and they cannot afford to pay more,” said James Mannix, head of residential at Knight Frank, speaking at the agent’s annual London market presentation and reported in the London Times. “Planning policy encourages larger, family units in the centre of town, but I am not sure that is entirely appropriate.”
There are currently estimated to be around 25,000 flats being built in central London. Many of them are being built to appeal to overseas buyers, who are less concerned about the practicalities of letting out their purchases, and more interested in buying for long term investment. And these buyers, if they want to rent their large roomed flats, are going to find few takers. Renters have an upper limit on what they spend, even though they would like to be in the centre of the capital. The Times reported comments from Mannix: “Many young, economically active people…… would prefer a small studio flat in the centre of town, than a one bedroom further out.”
Knight Frank says the private rented market presents great potential for companies prepared to take the first steps into such a fragmented market.