July 1, 2021
Rents are on the rise in London as part of Covid bounce-back
There has been some good news for landlords in London recently. Rents are recovering across the capital as some sense of certainty about the future post-Covid-19 returns.
Currently, the average London rent is around £1,638. This is a 68% increase compared to the average rents in 2008, (financial crash). The average rental income in 2009 was £678. While in 2020 this had risen to an average of £814, a 20% increase.
London did suffer as a result of the pandemic. Particularly at the higher end of the market. This came as people moved away from the cities and travel restrictions meant overseas students and young professionals couldn’t move to the capital to rent.
However, there are signs that the market is now bouncing back. Restrictions ease and city living returns with a vengeance.
Here, we give a rundown of why the current market is favourable despite rents not vastly increasing just yet.
London market shows signs of recovery
According to property website Home, there has been large-scale recovery in London’s rental sector. While average rents are still down overall compared to a year ago, most boroughs have been seeing significant increases over the last three months.
The greatest increases in asking rents over the last quarter were seen in the City (+30.1%), Wandsworth (+9.7%) and Westminster (+7.5%).
Home says the recovery is being driven by returning demand as the capital slowly bounces back from the pandemic. More sectors are reopening and universities are restarting.
Across the whole of the UK, including London, there has been a marked shortage of rental properties. This has helped to drive up rents. Yearly rent rises are in double digits in five of the nine English regions.
“Confidence is clearly returning to the rental market and over the coming months this will spill over into the sales market, which is still plagued by a glut of unsold stock,” Home said.
“Given the astonishing speed in the recovery in rents (and therefore yields), we expect buyer interest to increase significantly. Moreover, given that Greater London home prices have gone nowhere over the last five years, there’s plenty of room for growth.”
Despite the challenges of the last 16 months or so, many anticipate a competitive London rental market this summer.
Overall, renting is more prevalent among younger households. Recent figures show approximately only 41% of 25 to 34-year-olds own their homes. And, with renting now back to being cheaper than having a mortgage for most, demand is expected to remain high as young professionals, students and families return to the cities.
The length of time properties are rented on the rise
Recent findings revealed demand and tenancy renewals have increased in England. Statistics show people are now renting properties for longer.
According to a recent survey, 21% of UK residents plan to rent permanently. 30% of UK residents plan to rent for one to two years. Meanwhile, 23% said they plan to rent for three to four years, while 11% plan to rent for five to six years. A further 6% aim to rent for up to ten years.
Long-term rentals are appealing as they offer security for both the landlord and the tenant. More so now than ever, given the Covid crisis.
People who rent are not constrained to just one area. Instead, they have the flexibility to move locations freely. This could contribute to increased demand in different areas, as people move around London’s hotspots.
Rental hotspots for the ages
London has been, and always will be, a rental hotspot, drawing students, young professionals and others to its many attractive and varied destinations.
Here at Atkinson McLeod, we operate in a number of these across the capital. Including Brixton, Mile End, Hackney, Tooting and Clapham. As the city opens up fully again, these areas – with their bars, trendy cafes, restaurants, and arts venues – are likely to be more popular than ever.
As such, demand should continue to be high, and landlords should be able to charge decent rents. This, in turn, should lead to solid rental yields over time.
To get the most from your rental properties this summer, it’s crucial that you work with an experienced, well-respected letting agent.
If you have any questions about letting a home in the London area, Atkinson McLeod is here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.