Earlier this year, the London Central Portfolio (LCP) released data which highlighted an increase in demand for smaller ‘micro’ properties in parts of Belgravia and Knightsbridge.
According to LCP data, between August 2016 and August 2017, 42% of properties let to tenants were small, one-bedroom apartments or studios. This indicates a shifting of priorities, as more tenants choose location and convenience over space and size. By contrast, LCP recorded a slowdown in demand for larger properties in prime central London, as families in search of more substantial homes chose to look outside the central London area for better value and more space.
The same data revealed that it has taken less time to find tenants for smaller ‘micro’ homes than for larger properties, while the best rental increases have largely been reserved for one-bedroom units. Why? Because the types of tenants looking to rent in places like Belgravia is changing, and single tenants or young professional couples are increasingly looking for low-maintenance, newly-refurbished properties with high specification finishes, and square footage has become less of a priority than location.
Naomi Heaton, LCP’s Chief Executive Officer, said: “From a rental market perspective, a dynamic which was notable during the credit crunch is again apparent as corporates cut their housing budgets. Tenants are now looking for more affordable options, choosing central locations and an easy commute to work or university”.
Heaton continued: “This is reinforcing the new trend for the globally mobile to seek highly-specified micro apartments, with well-optimised space”.
If larger, older properties in high-value areas of London are seeing rent falls but smaller units and so-called micro apartments are witnessing rent increases, should the government be taking heed of this?
Heaton concludes that 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”.
So, with all this in mind, what constitutes a ‘micro home’? There is no concrete definition of the term ‘micro home’ or indeed ‘micro apartment’, but it generally refers to living spaces that are smaller than 37 square metres, which, according to current minimum space standards, is the minimum allowed for a one-bedroom flat.
It remains to be seen whether or not compact living becomes more widespread in London and elsewhere in the UK. Certainly, high property prices and rents have forced students and the city’s working population out of central London’s prime areas into more affordable areas outside Zone 1. But it seems, there remains a particular appetite for high-specification, smaller properties among a certain type of tenant. And for that type of tenant, Belgravia still carries a great degree of appeal.
Small-scale living has become a consideration for those who want to settle, at least in the short-term, in some of London’s most prized residential neighbourhoods. But is the construction and development of more micro homes really the answer to the UK’s housing issues?