When Scarlett Gray looked for an apartment in central London two years ago, she was practically laughed out of agents’ offices. She was told those sought-after places—think of a neighborhood with rows of white-columned townhouses—rarely come on the market.
This summer, she had to stop herself from checking listings online, because she became overwhelmed with her choices.
“Every single day there were more,” said Gray, 26, a marketing manager. “It was sort of a nightmare—but a good nightmare.”
Tenants like Gray now have the upper hand. Rents in prime central districts fell 3.6 percent in the year through July, as inventory surged, according to Knight Frank, a real-estate broker. The last time market conditions looked this good for tenants was after Lehman Bros. collapsed in 2008, said Tom Bill, head of London residential research at Knight Frank.
Gray ended up getting a spacious, sunny studio in a doorman building for £1,930 ($2,560) a month, which had just been slightly reduced.
A flood of properties have hit the rental market after successive tax increases in 2014 and 2016 deterred buyers, leading would-be sellers to put their places up for rent instead. Brexit-induced uncertainty has also added to the glut. The number of prime rental properties available surged 49 percent in the second quarter from a year earlier, the largest increase in six years, according to Knight Frank.
In Marylebone, a ritzy area tucked between Hyde Park and Regent’s Park, rents fell 8.2 percent in the six months to July, the largest drop tracked by Knight Frank. That was followed by Chelsea, where rents fell 7.6 percent. Rents in prime central London, defined by the broker as 14 districts, peaked in May 2015.
Landlords in some of London’s poshest neighborhoods are finding themselves at the mercy of tenants’ demands, and some are having trouble coming to grips.
An investment group that purchased a two-bedroom apartment in St. James’s Place refused to rent it out for just over £5,400 ($7,100) a month, opting instead to do a little refurbishment—against the agent’s advice. After the touch-ups, the apartment was still sitting on the market for weeks. One offer recently came in at around £4,750 a month.
“It’s very frustrating,” said real-estate agent Kim Bays, of CarterJonas, who was working with the landlord. “They think they can get so much more.”
About 5 percent of new rentals on the market in the second quarter belong to landlords who previously wanted to sell, broker Jones Lang Lasalle said in an Aug. 22 report.
“Tenants are quite savvy about what’s going on,” said Amelia Greene, a director at Savills. “They’ll take time, put in lower offers, have quite considerable wish lists.”
Tenants are testing landlords by putting in low bids on multiple properties.
“They can afford to put in cheeky offers, because at some stage there were some landlords more desperate than others for the rent,” said Karen Carpmael, an agent at W.A. Ellis.