London lettings market back with a bang, says leading agency

The tide is turning for the London rental market at last according to data from the Benham and Reeves lettings agency.

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 per cent to £1,556 in December. 

However, the latest data for July shows that London rental values have bounced back, up 2.4 per cent in the last month alone and are now 5.7 per cent higher than their December 2020 low.

This is a clear indicator that demand is returning to the capital’s rental market says the firm.

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 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.

“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” explains the director of Benham and Reeves, Marc von Grundherr.

“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.”

Table shows change in the average London rent since the start of the pandemic Month/Year Average London Rent per Month Monthly Change (%) Point Change (%) Jan-20 £1,627 N/A -4.4% Feb-20 £1,650 1.4% Mar-20 £1,673 1.4% Apr-20 £1,668 -0.3% May-20 £1,598 -4.2% Jun-20 £1,583 -0.9% Jul-20 £1,611 1.8% Aug-20 £1,653 2.6% Sep-20 £1,646 -0.4% Oct-20 £1,603 -2.6% Nov-20 £1,576 -1.7% Dec-20 £1,556 -1.3% Market Bottom Jan-21 £1,563 0.4% 5.7% Feb-21 £1,572 0.6% Mar-21 £1,586 0.9% Apr-21 £1,580 -0.4% May-21 £1,583 0.2% Jun-21 £1,607 1.5% Jul-21 £1,645 2.4% Data sourced from HomeLet