At the end of Summer 2021, London residential rental market ran hot and boiled up. Good quality properties within the price range of £2000-£3000 per month in Central London, especially around university campuses, go off like hotcakes. There are more and more those looking to rent and less and less rental stock. The number of landlord instructions decreased by 30% compared to 2020 – down to the 5 years minimum. As a result, rental prices went up by 2.8% compared to the previous year (according to Lonres). We are witnessing a very fast market where the opportunities come and go within hours.
Professional real estate associations and organisations report similar trends. The Association of Residential Letting Agents (ARLA) wrote in its June’s report that the number of new prospective tenants was at the highest level on record for this month. Royal Institution of Chartered Surveyors (RICS) also reported that tenant demand increased while the shortfall in new landlord instructions grew. According to the Office for National Statistics (ONS), private rental prices are rising everywhere in the UK.
There are several reasons for such turmoil. Summer has always been the most popular season for moving houses. At the beginning of the academic year, students arrive at university campuses and young graduates move to live closer to their first jobs. Families with children move during the school holidays.
In 2021 other factors added up:
On the demand side:
- Lifting of all Covid-19 related restrictions in the UK unleashed huge pent-up demand. All those who delayed changing their housing arrangements or couldn’t relocate to the UK because of closed borders, are doing it now.
- International students are responsible for up to 70% of rental applications in Central London. Their influx in 2021, according to some estimations, surpasses the level of 2019. Many of them are ready to rent flats by video and photos and often even without photos – in order to have at least some accommodation by the time they arrive in the UK.
- In addition to it, in Central London office activity is picking up. More and more professionals return to the City, again renting closer to their jobs’ location.
- In the first half of the year, 822 thousand Britons bought new houses and flats which they are renovating now. Many of those new owners rent temporary accommodations (for half a year or a year) till the works have finished.
On the supply side:
We’ve already covered the boom in the residential sales property market that was caused by the Stamp Duty holidays. The number of completed transactions has doubled in 2021 compared to 2020 and raised by 50% in 2019; prices have increased by 10%. Prices for rental apartments, on the contrary, have been falling throughout 2020. The increasingly complicated regulatory and tax rules were also not in landlords’ favour. Eviction of delinquent tenants became more complicated during the pandemic; taxes on rental income increased. All this forced the owners of rental apartments to sell them, fixing profits. And many have decided to diversify the investment portfolio in favour of growing stock markets. As a result more and more residential properties that were previously rented are being put up for sale. Their share in the number of apartments and houses sold has been growing throughout 2020. This has further increased the supply shortage in the rental market.
In times like this our role as agents increases. We understand the current market and the client’s demands and can quickly navigate the situation, act promptly and make the right offer to the landlord. Whether our clients are looking to rent or to purchase, we present them in the most favourable way – to get the desired property despite a large number of other bidders. Read more about how we help our clients in the next article.