London Rents Lower Now Than Five Years Ago
- London rents are down by 2.3% compared to March 2016
- The East Midlands has seen rents rise by 19.3% in the same period
- The time it takes to let a property is at its fastest pace ever in seven regions
- In the South West it is taking just 14 days to agree a tenancy on average
London rents are the only UK region where they are lower today than they were five years ago, according to Rightmove figures.
Rents across almost two thirds of the capital’s districts are lower now than they were in March 2016, meaning that the average London rent has fallen by 2.3 per cent.
The most significant fall took place in the past year, as rents dropped by 7.8 per cent on average.
All other regions of the UK have seen rental prices rise since 2016, with many having experienced double-digit growth.
Excluding London, average monthly asking rents across the country are at a record high of £982 per month, up 4.2 per cent since March 2020 – the highest annual rise since 2015.
The East Midlands has seen the highest rental increases, up by 19.3 per cent over the past five years, with asking prices rising from £733 to £875 per month.
In terms of towns and cities, Wolverhampton has seen rental prices soar by 35 per cent with rents increasing from £631 to £855 per month.
Walsall, Bradford and Liverpool have also seen asking rents surge, rising by 32 per cent, 29 per cent and 28 per cent respectively over the past five years.
What about the past year?
The challenges posed by the pandemic appears to have encouraged many renters to spurn London in favour of the regions.
This increased demand, coupled with a lack of available rental properties in many areas outside the capital, has continued to push asking rents upwards over the past 12 months.
The number of empty rental properties outside of London is down by 54 per cent compared to this time in 2019, whilst in London it is up by 19 per cent.
In seven regions, properties are letting at the fastest pace ever recorded, according to Rightmove.
In the South West it is taking an average of just 14 days to agree a tenancy, and in the East of England it is taking only 16 days.
‘Our data shows a stark contrast between the rental market in central areas of London and the market across the rest of the UK,’ said Tim Bannister, director of property data at Rightmove.
‘Agents are telling me that they don’t have enough rental stock to meet the demand from tenants in many areas, while in London there will be some tenants who have a lot more stock to choose from.
‘The frenzied buying and selling market is likely to be exacerbating the problem as well, as some sellers are moving into rental accommodation until they find the home they want to buy, adding further demand to already diminishing rental stock levels.’
What’s the advice for landlords?
Many landlords will be benefitting from the surge in rental demand – but there is always competition, for example to secure the highest rent or the best tenants.
‘Landlords need to ensure the property looks smart and fresh and has good wi-fi, and to keep any garden or outdoor space well maintained to attract the maximum number of tenants,’ said Lisa Simon, head of residential at property consultancy Carter Jonas.
‘If tenants are looking to negotiate then that provides an opportunity to review the length of contracts and secure longer term lets with an annual rent review, to take account of the fact that the market is likely to increase again.’
What’s the advice for renters?
With properties renting in record times, many renters are having to act faster than ever before to secure a home.
‘My advice would be to always offer asking price with an earlier occupation date, and be prepared to offer more if it’s a property you really want,’ said Simon.
‘Landlords like the security of longer-term tenants, so anything over a 12 month tenancy agreement is going to be favoured. It’s worth thinking mid to long-term about an area you’d like to live in.’
What is happening in London?
The decline in rents is being driven largely by areas of Inner London, where average rents are down by 6.5 per cent compared to five years ago.
Outer London is faring much better, with rents up by two per cent since March 2016.
The biggest rental falls in the capital have been seen in Finsbury, where asking rents are 24 per cent down since March 2016, having fallen from £2,818 to £2,147 per month.
Barnes and Stockwell have also recorded 20 per cent falls in asking rents, while Notting Hill has seen the average drop 19 per cent from £3,517 to 2,850 per month.
The figures – although alarming for landlords – are good news for London renters looking to take advantage of lower prices and explore areas that may have previously been unaffordable.
‘The events of the past year have had a big impact on rents in London, with the more central areas being hit the hardest as tenants are no longer tied to their workplaces and have been free to seek the larger properties and lower prices found slightly further out,’ said Richard Davies, head of lettings at Chestertons.
‘As a result, prices are the lowest we have seen for several years and represent incredibly good value for those tenants thinking beyond lockdown and looking to lock-in to a good deal.
‘As the country starts to open again, we expect growing numbers of tenants to return to the more central areas and anticipate that rents will quickly start to recover.’
What’s the advice for London landlords?
London landlords may be tempted to hold out for the kind of rents they might have been used to achieving in the past, but the advice is to be pragmatic.
‘My advice would always be to just get a tenant in the property – a discounted rent is still better than a long void period,’ said Naveen Jaspal, chief operating officer at online letting agent Mashroom.
‘Without a tenant in your property, you are liable for the council tax, the full mortgage and all of the utilities.
‘Get a tenant in, even at a lower price – use a six to 12 month contract and then reevaluate the market at the end of the tenancy agreement.’
What’s the advice for London renters?
Whilst competition for rental properties is fierce across all other regions outside the capital, the London market seems ripe for a bargain at present.
‘Falling prices are often seen as an immediate win for renters, enabling them to secure a property for what seems like a bargain,’ said Jaspal.
‘But it’s important to remember that you shouldn’t take a place that you think you will be priced out of when the market returns to normal, as you will be putting unnecessary financial strain on yourself further down the line.’