Spike in Rental Demand in UK Cities
According to figures published by Property Reporter, 25% of the capital’s population live within the London rental market. While it was initially expected that London would see a small drop in rental demand following on from the very first lockdown in the UK, the overall demand is still up year-on-year and it’s clear that the current pandemic is causing a shift in tenant trends.
Landlords renting out properties throughout the UK may have noticed a surge in recent months, with London landlords seeing a demand in tenancy by up to 10% during spring 2020 as we are now seeing rental demand at the highest ever on record. Tower Hamlets came out as the top-ranking rental hotspot in London, with 36% of those living within the borough renting private accommodation, the highest proportion of all London boroughs.
For London landlords, this may mean that now could be the best time to invest and devise your property investment strategy.
Updates to Rental Property Values
There is one thing that is very clear. Renters in London are vital in supporting the growth of the capital through working in London and the money they spend with local businesses and pump back into the city. Since the London rental market represents nearly half of the UK lettings market, any rental trends found in London can have a knock-on effect on the rest of the UK.
In 2019, the average time to rent out a property throughout the UK was 20 days. However, this has now fallen to just 16 days, according to LandlordZone, with London properties snapped up within 17 days, on average.
Rental Values in London
A large number of London boroughs have seen an uplift, in particular, Kingston has seen an increase in demand by 18% and Richmond, Islington, Havering, Hillingdon, Barking and Dagenham are also up by between 13 and 15%, according to Letting Agent Today.
As well as this, Westminster has now become the second-largest rental area in London, with 33% of renters living in this area. Other London areas that see an increased interest for rental properties include Newham, Wandsworth and Redbridge.
On the other side of London, the east, south and south-east is home to the lowest proportion of renters. Areas including Havering, Bexley, Bromley and Croydon all experienced drops in rental demand while areas within Central London and surrounding the north of London dominated rental demand, according to Property Reporter.
Why the Increase in Demand for Rental Properties?
With tenant demand in London increasing during the second quarter of 2020, this is thought to be related to tenants looking to downsize or move further out to save money, as well as landlords seizing this as an opportunity to sell up and take advantage of the extended stamp duty holiday introduced by the UK Government in a bid to save the UK housing market.
The increase in demand for London rental properties may also be linked to the statistic that rental prices are rising everywhere but in London, according to BuyAssociation. The study also shows that in England alone, rental values have increased by 3.2% between September 2019 and September 2020. However, rental prices in London dropped sharply by 5.2% in a bid to revive the London rental market which has accommodated the recent spike in demand.
Rental Demand Through the Pandemic
The rental sector has made a remarkable recovery and despite some tenants finding themselves in financial difficulty, rental demand has continued to climb across the UK’s major cities still with a strong offer for investors.
Though landlords experienced a tough year in 2020 with little to no help from the government and a ban on evictions, they are now able to feel a sense of normality and claw back on their rental property investment.
We generally do see a spike in rental demand interest following on when restrictions ease and have seen this come into effect following the first and second UK national lockdown. Since the letting market reopened in mid-May, demand has been at an all-time high, with the rental market seeing a 35% increase in demand compared to the previous year. To add to this, the number of tenants registering with letting agencies spiked to a record high in June 2020, according to ARLA Propertymark.
The same study showed that during the same month, 30% of letting agents saw rental prices increasing as a result of this high demand.
With 46.6% of people now working from home, 57.2% of whom live in London, working exclusively from home rose from 21% to 24% from April 2020, according to the Office for National Statistics. This rise in home working has led to renters searching for a home with capacity for a home office, and as such, has shifted the interest of remote workers to search for two-bedroom apartments in Zones 2-4, rather than a one-bedroom apartment in Zone 1 where their office would usually be situated nearby. Moving slightly further out to Zone 3-5 has meant that tenants are able to afford a larger property.
Head of Lettings at JOHNS&CO, Boutaina Cansick, adds “We have seen a clear shift in what our tenants ask for when searching for a property, with requests for pet acceptance and outside space dominating the top requirements.
“People’s homes have now become workspaces, gyms, schools and more! Gone is the strong desire to be close to the office and the hub of the prime central London social scene, and instead, moving out of 1 or 2 zones where affordability is the main focus.”
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If your knowledge isn’t up to scratch, or you are looking to expand your existing portfolio, we are here to support. With years of experience and in-depth local market knowledge, our lettings and sales team are experts in matching people with their perfect property.
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To discuss your requirements in more detail, please contact us. Please find information about our fees here. If you’re looking for similar lettings blogs you can find an investment guide here and landlord responsibilities here which may be of interest.