Inner London rents rose in June for the first time in 14 months sparking hopes of a recovery for landlords in the capital according to Hamptons.
Last month average rents jumped 4.3% from May, hitting £2,103 per calendar month, the first rise since April 2020, reports the estate agent’s Monthly Lettings Index.
However, the average rental home in inner London remains 16.5%, or £415 pcm, lower compared to last June.
The survey says: “Inner London bore the brunt of the pandemic’s impact on the rental market which saw a decade of rental growth wiped out.
“In previous downturns, inner London has typically been the region to lead the rest of the country.
“But this time around it was the only area where rents fell for 13 consecutive months, while rents in other regions reached record highs.
“However, it appears that late spring marked the bottom of the Inner London market.”
Rents lifted as tenants return to the capital.
The index adds: “The number of tenants registering to rent in inner London was up 16% on June 2020 levels and up 45% on June 2019.
“Zone 2 recorded the strongest growth in demand, but this has been almost completely driven by domestic, rather than international tenants.”
Rental growth has also been supported by lower stock levels, a reversal of the months following the height of the pandemic when landlords struggled to find long-term tenants for short-term lets.
In September 2020, there were 14% more homes available to rent in Inner London than in September 2019, the survey says, but by this June there were 8% fewer homes to rent than two years ago.
Family houses are most scarce, while entry-level flats make up most of the homes taking more than a week to let, the data points out.
By contrast, outer London rents recorded only six months of falls on an annual basis following the outbreak of the pandemic.
Outer London rents have grown for the last 10 months, with June’s 9.4% annual rental growth registering the strongest rise since the survey began in 2014.
The average rental home in outer London is now £1,685 pcm, which is 10% more than when the pandemic started last March.
Across the UK rental growth continued to climb in June, with rents rising 8.5% compared to a year ago.
The survey says four of the 10 fastest months for rental growth over the last decade in the UK have come since the onset of the pandemic.
It adds: “Stock scarcity has become a pressing issue, with 46% fewer homes on the market than at the same time two years ago. In rural and suburban areas, the drop in rental homes on the market has been even greater.”
Hamptons head of research Aneisha Beveridge says: “Over the course of the pandemic, inner London landlords have suffered more than investors anywhere else in the country.
“But in recent months rental growth here has changed course and is now on an upward trajectory.
“We are forecasting that rents in Inner London will return to pre-pandemic levels within 12 months.
“That said, and despite a recovery, rents in inner London are likely to remain lower than they would have been had the pandemic not happened.”
“A relatively buoyant recovery has ensued as restrictions have been lifted, but some scarring is likely to remain as tenants become less closely bound to their office desk and international travellers remain in short supply.”
