Data released this week indicates that the London rental market has finally bottomed out with rental values bouncing back following months of muted activity caused by the Covid-19 pandemic.
The new research shows that London rental values to July 2021 have risen 5.7 per cent higher than their December 2020 low.
The London rental market has been hugely impacted by the pandemic. Dwindling demand, due to a combination of working from home guidelines and travel restrictions preventing foreign interest, has caused property rental stock to flood the market and rental prices to fall as landlords tried to secure a tenant and recoup at least part of their rental income.
Demand Returns to London Rental Market
However, the latest property market analysis by London lettings and estate agent, Benham and Reeves, shows the tide has now turned and the London rental market is making a swift recovery.
In January of last year, the average London rent was £1,627 per month then, during the height of the pandemic, this plunged by 4.4 per cent to £1,556 in December 2020. However, the latest data for July shows that London rental values have bounced back and are up 2.4 per cent in the last month alone and are 5.7 per cent higher than their December 2020 low.
Director of Benham and Reeves, Marc von Grundherr, commented: “It’s been a very tough year or so for the London rental market which has arguably been the worst hit in terms of dwindling demand and plummeting rental values. That said, we can finally say with confidence that we’ve seen the bottom and a number of factors are now spurring a market-wide recovery.
We saw virtually no demand from overseas students last year which meant this stock further flooded a market that was already saturated due to a lack of interest from working professionals.
Although widespread lockdown restrictions remained in place during the start of this year, the reversal of the working from home trend and the return of foreign student demand, in particular, are currently driving a London rental resurgence during the second and third quarters.”
Rental Stock Levels Bottom Out
Additional research by the agent further cements the London market revival.
Prior to the pandemic (in Q4 of 2019), some 47,000 rental properties were listed to rent across London. However, as demand fell and tenants vacated the Capital as their property preferences changed, rental stock climbed to 105,086 properties by Q3 of 2020 and remained above this 100k landmark threshold for three consecutive quarters until falling to 73,797 in Q2 2021.
In fact, the latest analysis by Benham and Reeves shows that this figure has now fallen to 64,206. While this is yet to reduce to pre-pandemic levels, it provides another strong indicator that the London rental market is bouncing back and tenants are returning to the capital.
Are you a London landlord? Are you seeing a rebound in the rental market in your area?