London rents have risen 12.3% over the last year, with growth being driven by renters returning from outside the capital, the latest data from Hamptons Letting Index shows.
The index found that nearly one third (30%) of all new tenancies in the capital so far this year have been secured by someone moving from outside of London, which has increased from 12% in 2020.
Inner London has become home to 65% of these movers this year, which is up from the more normal 50/50 Inner and Outer London split.
Tenants leaving the home counties have been behind the bounce back with 55% of tenants who moved into the capital this year coming from Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent or Surrey, compared to the 40% pre-Covid average.
It also found that more than one in four tenants based in Wokingham, Hertsmere and Epping Forest moved into London this year.
In terms of rental growth, the cost of a newly let home increased 9.8% over the last month to £1,125 per calendar month (pcm), marking the fastest level of growth since the index began in 2013.
The record rise signalled that just over half of all rental growth recorded during the last five years across Great Britain has come within the last 12 months.
On a regional basis, rental growth continues to be led by the South West of England where rents rose 13.9% over the last 12 months, closely followed by London at 12.3% and then the three Northern regions at 9.4%.
This is the first time since the onset of Covid that London has been in the top three regions for rental growth in the country, which is due to the bounce back in Inner London rents.
Meanwhile, there are 30% fewer properties available to rent this April compared to the same period last year, while the fall from pre-Covid levels comes in at almost two-thirds, down 61%.
The North West, Yorkshire & Humber and London have recorded the largest falls in rental stock anywhere in the country, down 76%, 67% and 64% respectively.
Commenting on the latest data, Hamptons head of research Aneisha Beveridge says: “With Covid being pushed further to the back of people’s minds, life in the capital is slowly returning to its new normal. Tenants are returning to the bright lights of the city and this is driving rental growth to record highs.”
“The rise of remote working means that fewer tenants are moving to the capital specifically for work. In fact, a growing number of tenants choosing to live in London are working fully remotely and could live nearly anywhere in the country. The footloose nature of many jobs today means that it will be culture and lifestyle rather than employment that becomes the capital’s biggest draw.”
“The current pace of London rental growth is predominantly down to the capital playing catch up with the rest of the country. Today, the average rent in London stands 103% above the average outside the capital. While this gap is up from 96% a year ago, it remains below the 120 to 130% pre-Covid premium which has been eroded by strong rental growth outside the capital in recent years. But the current pace of rental growth in London is likely to push the premium closer to its pre-Covid level inside two years.”
