Rents in London and other city centres are beginning to “bounce back” from pandemic lows as younger renters take advantage of cheaper deals, according to Zoopla.
As the UK emerges from lockdown restrictions, renter demand in inner London lifted by 7% while central Manchester is up by 5% in the month since Easter, says the property portal’s quarterly rental market report.
Outpacing that, central Edinburgh has seen rents jump 26% over the same period, with central Leeds seeing a 12% spike.
During the height of the health crisis last year, city offices shut down and renters left city centres for out-of-town or country sites.
This left rents in London 9.4% lower, with affordability running at a ten-year high.
By contrast, rents outside the capital are up 3% on the year, their highest level of growth in four-and-half-years, as demand for properties rises.
The report says: “However, the city centre downturn is starting to reverse as the economy opens up, workers start to return to their offices, leisure activities restart, and renters return in search of a rental bargain and restoration of their social life.”
It adds that younger people are leading the return to city centres, and in the capital “are looking to future-proof current rental affordability, locking in cost savings for as long as possible, with agents reporting an increased number of longer-than-average tenancies — in excess of 12 months — being agreed”.
The survey says: “One year on since the housing market reopened and the Covid-led decline in rental demand for city centre housing is starting to bounce back, as the UK emerges from lockdown and affordability for renters improves.”
The return of these renters and is starting to absorb the supply surplus that characterised the market over the past year, leading to rent falls in desirable areas.
The survey points out that rents in the City of London, Kensington and Chelsea, and Westminster, are at their lowest for a decade. Average Westminster rents are currently £2,259 per calendar month – down from £2,617 last February.
Foxtons chief sales office – lettings Ed Phillips says: “This resulting supply/demand shift has led to traditional renting hotspots such as Westminster and Chelsea becoming more affordable, and as such an opportunity that some people, especially the younger generations, have begun to exploit in early 2021, to access areas that were previously unattainable.”
Chestertons head of lettings Richard Davies says that a number of tenants are committing to two-year fixed contracts to lock in lower rents.
Davies adds: “A significant proportion of tenants in city centres are international students and corporate tenants. Due to Covid-related travel bans, this audience declined considerably, having a direct impact on the prime lettings markets.
“The number of available properties to rent is 83% higher than this time last year, which led to many landlords of top-end properties dropping their rents. The majority of tenants currently looking to move are already in rented accommodation but are eager to secure more property for their money.”
By contrast, rents are rising fastest in the North East, up 5.5%, and the South West, up 5.3% compared to a year ago – the strongest rates of growth in a decade in these regions, due to increased demand and constrained supply, says the survey.
Hometrack managing director David Ross says: “Rental demand will continue to rise in city centres as offices start to re-open and this, coupled with increased affordability levels in many cases, will start to counter the negative pressure on rents seen over the last 12 months.
“In London, where rents are down 9.4% on the year, a modest reversal in rental declines has begun, but it will be a slow build back to pre-pandemic levels in inner London.
“The recovery will be uneven and we expect new or recently refurbished properties to attract higher levels of demand in the second half of the year.”
