The average cost of renting in London has fallen dramatically in the wake of the coronavirus lockdown as the number of available rental properties has soared.

Both room rents, and rents for entire properties, have fallen compared to the same time last year according to new figures released by SpareRoom and Rightmove.

Asking rents in London dropped by 0.6 per cent to an average of £2,046 a month between April and June compared to the same quarter last year.

Why are rents falling?

Rightmove attributed the fall to a 41 per cent increase in rental stock following a surge in vacant Airbnb-style flats being repurposed as long-term rentals as the impact of an extended lockdown period hit the short lets market.

A survey of 400 landlords carried out by Rightmove found that one in four plan to expand their property portfolio to take advantage of the stamp duty holiday announced last Wednesday. This could lead to a further influx of properties in the rental market.

Rightmove’s Miles Shipside said: “Many renters may feel they’ve been left out of the Chancellor’s recovery packages, but one glimmer of hope is that the temporary stamp duty savings may entice more investors to expand their portfolio. If this does happen we could see more choice for tenants and in turn prices may stabilise for a while, but it will take some time.”

The property search site also pointed to signs that London renters are moving out of the capital after lockdown, freeing up homes in the inner city but increasing demand for property in other locations.

Asking rents outside the capital rose 3.4 per cent between April and June this year, hitting a record £845 per month, with phone and email enquiries to non-London agents at an all-time high on Saturday June 6, 2020.

“There are early signs that some existing London renters are looking to move further afield, adding to the large increase in the number of properties up for rent on Rightmove in the capital, so prospective tenants there could find there’s some room to negotiate especially if they are happy to sign a longer-term contract than usual,” said Mr Shipside.

Where have London rents fallen the most?

Rents in the capital’s most expensive central neighbourhoods have fallen the most, while cheaper outer London areas recorded stable prices.

SpareRoom’s figures, which look at the cost of renting a room in a house share, found that rents fell by 20 per cent to an average of £919 s month in Kensington; by 17 per cent to £824 a month in the City’s EC1 postcode; and by 16 per cent to £751 in the Vauxhall/Stockwell postcode of SW8. North Kensington, W10, also saw a drop of 16 per cent take average rents down to £756.

In contrast, some of the cheaper south-east London postcodes saw average rents fall by just one per cent, yet neighbourhoods such as Penge and Eltham saw average rents actually rise by seven per cent.

Room rents were also up in Dulwich, Lee, Deptford, Norwood and Crystal Palace, all in south-east London.

Director of SpareRoom Matt Hutchinson said: “Restrictions on moving home, the fact that people’s incomes have been negatively affected and a ‘flight from London’ to other areas of the UK are all likely to be factors.

“Another possible trend that could be putting downward pressure on London rents is a move away from areas with London Underground connections, which traditionally command a premium.

“With ongoing working from home and coronavirus fears putting people off getting on the tube, people may be looking instead at areas on the Overground. That would explain why rents are faring better in some areas of south east London.”

Blog Post from Evening Standard Homes & Property

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