Rent in London: Prices hit record highs in the pressure of new cost of living

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Ondon rents have risen to record highs in a “drastic” new cost of living squeeze for hundreds of thousands of renters, according to a new study.

The average monthly rent in London rose 10.9 per cent last year to £ 2,142, sending them above pre-pandemic levels for the first time by the end of 2021.

Realtors said red-hot demand as the economy reopened after easing Covid restrictions last summer, combined with an acute shortage of new properties on the market has caused rents to spiral upward.

The increase was largest in inner London, where they grew by 16.2 per cent during the year, according to data from real estate website Rightmove. The trend accelerated during the fall with a jump of 6.2 percent in the last quarter alone – the highest for any region in the country.

Areas with the fastest rises included Islington, Kensington, East Sheen, Chiswick and St John’s Wood.

Table: Rents in inner vs outer London

The London area

Average required rent per month

Annual change

Inner London

£ 2,577

+16.2%

Outer London

£ 1,823

+5.8%

The increase marks a dramatic turnaround from 2020, when rents in London fell during the first lockdown, as many young tenants moved back to live with their parents or returned to their European home countries after Brexit.

The situation is so dire that a London Chestertons agency has taken the unusual step of writing to tenants in Wandsworth to warn them that “2022 is set to be the toughest year ever for tenants in London” and advises on steps ” which can potentially save you money and a lot of stress. ”

Giles Milner, marketing director at Chestertons, said the situation was “pretty drastic” and is likely to get even worse this year.

He said tax changes that made purchases to make purchases less attractive had reduced the flow of properties coming onto the market. He said: “This will not go away, we will not suddenly have an influx of rental properties. In some areas we rent pitches in three hours without people seeing them at all.”

Across the entire Wandsworth SW18 zip code, Rightmove currently advertises only 108 properties for rent, where it can normally be expected to have as many as 350 available.

Rightmove’s director of property data Tim Bannister said 2020 had been “defined by the race for space outside cities as tenants’ priorities changed and many moved further out looking for a larger property with green spaces or temporarily moved back to the family.

“London was perhaps the biggest example of this, with landlords significantly declining in asking for rent by the end of the year to encourage tenants to stay in the capital.”

But he added: “A year later, rents have finally risen beyond pre-pandemic levels, a sign that the capital has not lost its attraction and popularity with tenants as landlords are looking to renegotiate previous terms of reduced prices.

“Tenant demand will continue to be really high as we enter the new year, which means that the imbalance between supply and demand will continue until more options enter the market for tenants, which has led to our prediction of a further increase at five percent average rent in 2022.

“Landlords understand the importance of having a good, long-term tenant, and there is a limit to what tenants can afford to pay, which will prevent rents from rising at the same rate we have seen over the past year.”

Dan Wilson Craw, executive director of the Generation Rent campaign group, said: “We have seen this come since most of the Covid restrictions were lifted last summer. People were urged to go back to the office, universities were urged to open up, so we saw more people go back to the cities.

“So there is a great demand for rentals, and we have seen the number of properties fall as a result. Of course, it’s a huge challenge if you have to move for some reason and keep getting outbid by people who can afford more.

“In the short term, it’s really hard to see how to overcome this. In London, we would say that where homes are empty or rented out on Airbnb, there must be more incentives to get them back into the long-term housing market.

“We have also called on the Chancellor to withdraw the tax breaks on mortgages for holiday home owners, as they are currently receiving favorable treatment compared to rented homes.”

The biggest increase in competition has been for apartments – which were previously out of advantage during a “race for space” – with an increase of 132 per cent followed by terraced houses (40 per cent) and semi-detached houses (30 per cent).

So far this year, Chestertons has registered 20 percent more potential tenants than in the same period in 2021 and received 51 percent more inquiries – but there are 67 percent fewer rental homes on the market.

Richard Davies, rental manager at Chestertons, said: “Many tenants were able to secure a cheaper rental home during the pandemic and are eager to stick to a good deal for as long as possible. With fewer tenants willing to relocate , the number of properties returning to the market for rent, especially at the more affordable end of the market, will also fall.As such, tenants wishing to relocate this year may be willing to compromise or consider smaller central neighborhoods to ensure a suitable property within their budget. “

Marc von Grundherr, director of another London agency, Benham and Reeves, said: “London’s rental market is drastically different from what was seen in 2020, when landlords were forced to sharply reduce demanding rents to secure a tenant and avoid long voids. periods due to an emigration of market activity from the capital.

“In fact, the surplus of vacant rentals that accumulated due to the pandemic has now plummeted and this has been driven by a staggered return to the workplace and in particular a huge influx of demand from overseas students.

“We have also seen a huge increase in the number of rental renewals, which have even exceeded the 2019 levels, and although some areas have yet to see rental value return to the pre-pandemic norm, it is only a matter of time before the market sees set to continue with this strong return to form through 2022. “

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