Growing demand and a shrinking supply of rental properties in prime central London (PCL) has led to a 50% increase in sealed bids over the last three months, according to Knight Frank.
Also known as competitive bidding, sealed bids enable prospective tenants to submit their best and final offers for a property when there are multiple interested parties.
“Once extremely rare in the rental market, every office across our PCL network is now reporting a pronounced increase in sealed bidding,” David Mumby, regional partner at Knight Frank, comments.
“Without doubt, the increase in demand from the tech sector and limited options for tenants are driving demand at a rate we haven’t seen for years.”
He noticed there was also a 23% rise in the number of tenancy renewals between 2016 and 2019, amplifying the lack of supply with fewer new properties entering the market.
“Landlords have faced a succession of tax changes in recent years, which has squeezed supply,” says Tom Bill, head of London residential research at Knight Frank. “The ultimate impact of such measures has been to push rents higher and add to affordability pressures for tenants.”
According to Knight Frank data, the number of new prospective tenants in PCL increased by 33% in the year to January 2020 compared to the previous 12 months. Meanwhile, the number of new rental listings in London declined by 15.5% in 2018, and then increased by 4.6% last year.
The ratio of new prospective tenants to lettings listings currently stands at 6.1 – up from 4.7 in 2018.