Rents now a third above London’s pre-pandemic average

Annual rental growth across prime London slowed slightly to 8.1 per cent in October according to property data firm LonRes. 

However, rents are now 33.0 per cent above their 2017-19 pre-pandemic average.  

All areas and sub-markets have seen growth but what LonRes calls the ‘prime fringe’ was the best performer for the eighth month in a row, recording an annual rise of 11.2 per cent.

Tenant demand still appears high anecdotally, but recorded activity is low = that’s because a high proportion of properties are being let without listing, so are not captured in the data.  

Lets agreed in October fell by 3.7 per cent compared to a year earlier, and were 54.5 per cent lower than the average October levels recorded in 2017-2019. Annual growth in new instructions was 17.2 per cent in October. 

Rising instructions and continuing low levels of newly agreed lets mean that the stock of homes available is growing compared to the low point reached at the end of 2021.  At the end of October there were 60.9 per cent more properties on the market to let than a year ago. However, the current level is still 39.5 per cent down compared to the end of October 2019. 

Breaking these results down by price point shows that the shortage of rental properties is more acute at the more affordable end of the market.  

For properties available at less than £750 per week, there are 29 per cent more homes on the market compared to a year ago but 65 per cent fewer than four years ago.  At higher price points the longer-term drop is much lower, for example above £2,000 per week there are only 15 per cent fewer homes available than four years ago.

Nick Gregori, head of research at LonRes, says: “The prime London lettings market remains difficult to analyse due to the limited sample of properties actually being listed. On the rental demand side, we are seeing longer contracts and tenants swapping within those when they need to move rather than whole properties coming to market.  

“With supply, there is little evidence of any mass sell-off from landlords, but a lack of new entrants is steadily reducing the overall stock of what might be considered ‘typical’ buy-to-let properties.  This means that the market may find it difficult to return to 2019 levels of available rental homes, particularly for those more affordably priced.”