London Market Comment: where am I working today?

Central London demand is being driven by people keen to be back at their office, but having to work some days from home. Needing somewhere to live where this is practical, they are taking advantage of greater choice, while it lasts.

There is an irony here. Amidst accusations of staff getting too comfortable working from home and being in denial about its shortcomings, central London office employees want nothing more than to get back to their desks full time. In most cases, it’s why they live, where they live, having prioritised location over space. True, incomers are typically astonished to find how strong community life can be in places like Holland Park and Pimlico and yes, to be part of a quieter, more relaxed London has been an enjoyable revelation for many – but they still want to get out and physically go to work.

To allow social distancing, many businesses are restricting office numbers and some big employers, including NatWest and Standard Life Aberdeen, have announced that most staff will not be returning to their City offices until 2021. Suddenly, the pied-à-terre you took thinking you would only be there whilst you slept, has to double up as your office as well. Perhaps the most affected have been couples in small one bedroom flats, each facing another day of hours spent participating in different video meetings. Like so many others, they need at least one more room. With a door.
More choice for tenants – for now
The good news for central London renters able to move anytime soon, is that they can probably afford that extra room. Demand from tourists for short term lets has been close to zero, pushing thousands of Airbnb apartments onto the longer term rental market. With numbers of wealthier foreign students also much reduced, supply is high and rents have adjusted accordingly.

As well as enabling locals to trade up, much firmer rental markets further afield have cut the central vs. suburban price differential, tempting others to move closer in. If you want to live more centrally, now is the time to make that move.
Commit long
Tenants who feel in a stronger negotiating position sometimes push for a break clause after just six months. In the current market, however, this looks self-defeating. If anything, it makes sense to fix for a longer term, whilst rents are more affordable. Most landlords will consider up to three years.
Sales: never busier
As with Lettings, the London Sales market shows strong differences between centre and suburbs – though both are exceptionally busy. Even allowing for the lockdown period, our Pimlico & Westminster office is set for its best year ever. So who is buying? In most cases, it is existing local residents who were renting. Attracted by lower stamp duty (two bed flats in SW1 start at around £650,000) and low interest rates they, too, are taking advantage of an improved supply.

Significant demand is also coming from families selling a less central home and opting for the ‘flat in London, house in the country’ lifestyle which, until recently, was impractical for working couples (this is also likely to increase calls for a season ticket which can be legally shared). Is there any demand from overseas buyers? Yes, most certainly and, in common with almost all who are registering with us now, they want to be long-term owner occupiers, which augurs well for the areas in which they are buying.
Broad social change
Beyond central London, higher levels of supply and demand there, too, reflect a broader picture of social change. Our Teddington office is seeing a higher turnover of stock at all price levels than for some years. There and across London it seems, lots of residents are on the move. Their reasons why, vary greatly, but it is rare for coronavirus to not be a factor, as people re-evaluate their working lives and their relationships with their home and community and strive for something better. What they want has changed from a few months ago. It is more nuanced and sometimes harder to define. We are fully aware of this and, if you think we can help, we promise to listen, to avoid making assumptions – and to help you find it.