The decline in rental growth is driven by areas of inner London where asking rents have fallen by 6.5% compared with Q1 2016, whereas asking rents in outer London are holding up better, having risen by 2.0% over the same timeframe.
Finsbury has seen the greatest decline in the capital, as asking rents were found to be down 24% on five years ago, from £2,818 per calendar month to £2,147.
The number of rental properties in Finsbury on Rightmove is up by 76% compared to a year ago.
The biggest five-year rise in London is in Hammersmith where asking rents were found to be 12% higher, although the rental growth occurred between 2016 and 2020 as rents are down by 19% in the area compared to this time last year.
In cash terms, the biggest decline was in Knightsbridge, where monthly rents are £1,246 lower than five years ago, although they were still a considerable £6,221 per month.
Outside London there were only seven locations in the study with asking rents lower than five years ago: Surrey, Woking, Walton-on-Thames and Weybridge, the city centres of Southampton and Birmingham, and Leamington Spa and Chigwell.
On a regional basis, the East Midlands has seen the biggest increase over the past five years of 19.3%, rising from £733 to £875 per calendar month; it has also seen the largest growth over the past year, up by 7.5%.
The strong demand has led to the percentage of available rental stock outside the capital being down by 54% compared to this time in 2019, while in London it is up by 19%.
This has led to the majority of regions seeing properties let to a tenant in the fastest time since this data started being recorded 10 years ago, led by the South West at 14 days, followed by the East Midlands at 17 days.
Tim Bannister, director of property data at Rightmove, said: “Our data shows a stark contrast between the rental market in central areas of London and the market across the rest of Great Britain.
“Agents are telling me that they don’t have enough rental stock to meet the demand from tenants in many areas, while in London there will be some tenants who have a lot more stock to choose from.
“Landlords who five years ago took a longer term view obviously couldn’t foresee the effect that COVID-19 would have on rents, and right now they’ll be doing all they can to prevent voids and hope the drop in rents is fleeting.
“The frenzied buying and selling market is likely to be exacerbating the problem as well, as some sellers are moving into rental accommodation until they find the home they want to buy, adding further demand to already diminishing rental stock levels.”
