The London rental market has suffered greatly as a result of the pandemic. Dwindling demand due to a combination of working from home guidelines and travel restrictions preventing foreign interest had caused stock to flood the market and rental prices to fall, as landlords looked to secure a tenant and recoup at least part of their rental income.
However, the latest property market analysis by London lettings and estate agent, Benham and Reeves, has found that the tide has now turned and the London rental market is making a swift return to form.
In January of last year, the average London rent was £1,627 per month but during the height of the pandemic, this plunged by 4.4% to £1,556 in December. However, the latest data for July shows that London rental values have bounced back, up 2.4% in the last month alone and are now 5.7% higher than their December 2020 low.
This is a clear indicator that demand is returning to the capital’s rental market and additional research by Benham and Reeves further cements this trend.
In Q4 of 2019 prior to the pandemic, there were some 47,000 rental properties listed to rent across London. But as demand fell and tenants vacated the capital during the pandemic, this climbed to over 100,000 rental properties by Q3 of 2020 and remained above this landmark threshold for three consecutive quarters.
However, the latest analysis by Benham and Reeves shows that to date, this figure has fallen to 64,206 and while it 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.
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.”