At the height of the property boom some developers were throwing in incentives such as a free car to seal a deal. Now, as the market limps into 2009, lettings agents are belatedly trying the same tactic, with one London agent, Laytons, promising to waive its fees and include £100 of Harvey Nichols vouchers or a pair of Fortnum & Mason hampers if tenants agree to rent a two-bed flat in Shad Thames, near Tower Bridge.

Lettings agents are not the only ones who are having to up their game. Owners whose homes have languished unsold for months will fare no better as landlords unless they are prepared to bring their property up to scratch. Agents say that many of the failed sales on the rentals market are too dowdy and unfashionable. Tenants are taking advantage of the oversupply of properties by demanding more for their money while driving down rents.

“The market is being flooded with unsold stock that is not in a lettable condition,” says Lucy Morton, president-elect of the Association of Residential Letting Agents. “These properties will continue to be empty until they have been refurbished to the high standards expected by tenants.”

The glut of unlettable properties is particularly acute at the high end of the London market, where wealthy foreign tenants, often Americans paying top dollar, expect high-quality neutral furnishings in contemporary styles as well as all the latest gadgets.

According to Morton, who is also managing partner and head of lettings at W. A. Ellis in Mayfair, about 35 per cent of properties on the rentals market in Central London are not up to the standards required by discerning tenants. Of those, 20 per cent are simply not lettable because the owners either cannot or will not spend the money required to satisfy tenants.

Tenants are just as likely to shop around in less expensive locations outside the capital. Sasha Smith, lettings manager for Winkworth in Sheffield, has been struggling to let a couple of houses that were put on the rentals market in July because they failed to sell. Smith says: “They are both very old-fashioned, with patterned carpets and patterned wallpaper. Should the owners revamp the homes in a more neutral style, I would be able to let the houses within a couple of weeks.”

Landlords must grasp that sales and rentals markets work differently. Sonja Broderick, of Hamptons International in Henley, Marlow and Maidenhead, explains: “A buyer might be happy to purchase a tired house because they can add value by doing the work themselves. A tenant wants the property to be fresh and ready to move into immediately.”

The glut of rental properties is pushing rents down in most parts of the market, with the exception of the very top end of the Central London market. Immaculate homes in top postcodes can still fetch rents close to asking prices. Morton says: “We recently had three tenants outbidding each other for a first-floor flat in Cadogan Square, Chelsea, which has now been let for close to the asking price of £2,450 a week.” But the same cannot be said for top homes outside the capital. Broderick is trying to let an impeccable seven-bedroom Georgian house near Maidenhead for £10,000 a month with little success. She believes that the property may let only if the rent is halved, to £5,000.

Tenants in that area are demanding much smaller homes with rents at about £1,000 a month. One and two-bedroom flats are now letting at between £650 and £900 a month. Last year they would have fetched between £1,200 and £1,400.

Landlords who try to charge too much will simply end up with no rent at all. Carla Ingram, lettings manager at the Kinleigh Folkard & Heyward office in Muswell Hill, North London, says that the most successful landlords are those who offer well-presented, clean and neutral homes at competitive prices. “A lot of people specify things such as wood flooring and won't take a flat if the communal parts are worn and dirty. But if the landlord puts up the rent, tenants will shop around. We are struggling to let anything that is on for too much money.”

Laytons: 020-7127 4578

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