According to Rightmove data, London rents rose to a record high due to a “drastic new cost of living squeeze” for hundreds of thousands. The trend picked up in the autumn, with a 6.2% increase in rents in the last quarter. This is the highest rate of any region in the country. Table: Rents in inner and outer London
London
Average asking rent per month
Annual change
Inner London
?2,577
+16.2%
Outer London
?1,823
+5.8%
This is a dramatic turnaround after 2020, when London rents plummeted due to many young tenants returning to their home countries or moving back to their parents’ homes. Chestertons also wrote to Wandsworth tenants to warn them that 2022 “is shaping up to be one of the most difficult years ever for tenants in London” and offer advice on how to save money and stress. Chestertons’ marketing director, Giles Milner, said that the situation was “pretty dire” and could get worse. He said that tax changes had made buy-to-let less appealing and reduced the number of properties on the market. He stated that “This is not going away, we aren’t suddenly going to get an infusion of rental properties. Some areas are letting out properties in as little as three hours, with no one even seeing them. “Across the whole of the Wandsworth SW18 postcode Rightmove is currently advertising just 108 properties to rent where it might normally be expected to have as many as 350 available.Rightmove’s director of property data Tim Bannister said that 2020 had been “defined by the race for space outside of cities, as tenant priorities changed and many moved further out looking for a larger property with green space, or temporarily moved back in with family. “London was perhaps the most prominent example of this. Landlords drastically reduced asking rents by year’s end to encourage tenants to remain in the capital. He added that asking rents had risen above pre-pandemic levels. This is a sign that the capital’s appeal and popularity has not diminished as landlords try to renegotiate cut-price terms. Tenant demand remains high in the new year. This means that the imbalance between supply-demand will continue until more tenants are available. We predict a five percent increase in the average asking rent in 2022. “Landlords know the importance of having a long-term tenant. There is a limit on what renters can afford to rent, which will stop rents from rising at the same pace we’ve seen in the past year. “Dan Wilson Craw is the deputy director of Generation Rent. He said that they have seen this happen since the Covid restrictions were lifted last year. People were encouraged back to the office and universities were encouraged openly so that more people returned to cities. There is a lot demand for rentals, and we have seen the number drop as a consequence. It’s a challenge to find the right property for you, especially if you have to move for any reason. “In the short-term, it’s hard to see how you can overcome this. We believe that Londoners should be given more incentives to rent their homes to people who are renting them out on Airbnb. “We have also called on the Chancellor not to give mortgage interest tax relief to holiday let owners as they are currently treated more favorably than tenants of homes. “Floors have seen the most competition, which were previously out of favor during a lockdown “race to space”. There was a 132 percent rise in flats, followed by semi-detached and terraced houses (40%) and semi-detached homes (30%).
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Chestertons has received 51% more inquiries and registered 20% more potential tenants this year than in 2021. However, there are 67% fewer rental properties available. The number of properties available for rent will decline as fewer tenants are willing to move. This is especially true for the more affordable properties. Tenants looking to move this year might need to be open to considering less central areas in order to secure a property within their budget.” Marc von Grundherr, director at another London agency Benham and Reeves said: “The London rental marketplace is vastly different from that of 2020 when landlords had to reduce asking rents to secure tenants and avoid long void periods due the exodus of capital market activity. “In fact, the surplus rental stock that was accumulated because of the pandemic is now in decline. This has been driven by a staggered recovery from the workplace and, in particular a large influx of overseas students. “We have also seen a significant increase in tenancy renewals that has even exceeded 2019 levels. While some areas are still not seeing rental values return to pre-pandemic norms, it is only a matter time before the market sees a strong return to form throughout 2022.”
