According to new research from London Central Portfolio (LCP), Prime Central London (PCL) is witnessing the rise of the micro-apartment as squeezed budgets see tenants opt for location and convenience over size.
LCP’s analysis revealed increasing demand for smaller properties that offer an affordable option for tenants who want to be located close to where they work or study.
Over the last 12 months, 42% of properties let have been studios or one bedrooms with tenants prioritising lifestyle and transport links over square footage. In contrast, demand has been lower for larger properties with families seemingly more willing to move further out for better value and more space. Although their data relates to sales rather than lettings, Savills reported a 68% increase in the rate of thirty somethings leaving London, compared with five years ago.
LCP’s analysis also revealed that discounting has been much less marked for smaller units than larger ones. Discounts were on average 5.2% and 6.2% for studio and one bedroom units compared to 7.8%, 9.9% and 11.2% for two, three and three + bedroom units. It also took on average 42% longer to find tenants for for two, three and three + bedroom units than for one bedroom or studio units.
LCP point to the number of properties being rented by price band as another indication of the trend in PCL towards micro-apartments. Over 1/3 of properties let (36.6%) have rents under £500 per week whilst only 3.2% of units have been rented over £2,000 per week. 70% of units being let now have rents of under £750 per week.
In addition, analysis of LCP’s rental portfolio shows that whilst tenants would compromise on size, they were less willing to compromise on spec. Over the last 12 months, newly refurbished one bedroom units recorded average rental increases of 6.9%, compared with a 1.9% fall for older stock.
Commenting, Naomi Heaton, CEO of LCP, said: “Tenants are now looking for more affordable options, choosing central locations and an easy commute to work or university. This is reinforcing the new trend for the globally mobile to seek highly specified micro-apartments, with well optimised space, whilst families tend to opt for more suburban locations where smaller budgets can stretch to larger homes.
“It is very clear that tenants are now looking for smaller properties, which offer more affordable prices, but want top quality properties with transport links and amenities on their doorstep. As the popularity of micro-apartments increases, it may perhaps be time for the Government to review their minimum space standards, introduced in 2014 and cater for what the market really demands. This will not only offer a more affordable product for London’s working and student population but by optimising the use of small spaces provide a greater volume of housing stock at a time of a critical UK housing crisis.”
Inspired Homes has developed more than 400 high tech, high spec micro-apartments to date with hundreds more in the pipeline. To enquire, call the sales team on 020 8688 6552.