Rents in much of London have not only bounced back from the pandemic but now exceed the levels reached in 2020.
Research from Benham and Reeves, a London-focussed lettings agency, shows that between 2019 and the end of 2020 the average London rent fell by 3.4 per cent.
The impact was far greater across many parts of the London market, with Camden seeing rental values plummet 20.7 per cent while the City of London was also one of the hardest hit with a 12.6 per cent reduction.
However, as London has slowly returned to business in 2021, tenant demand has also returned and current rental values now sit 9.4 per cent higher than they did during 2020.
London’s more peripheral boroughs are still seeing the strongest performance. Rents are up 20.1 per cent year on year in Kingston, with Bexley (18.3 per cent), Newham (15 per cent), Croydon (14.1 per cent) and Hillingdon (13.6 per cent) also amongst the largest increases.
The City of London remains the main area yet to recover from the pandemic, with rental values still down 11.4 per cent annually.
The agency suggests that the most positive sign is that the average London rent is now 5.7 per cent higher than it was in 2019, prior to the market slowdown.
Just the City of London (-22.5 per cent), Camden (-18.9 per cent) and Westminster (-4.6 per cent) are yet to see rental market values return to pre-pandemic levels.
Benham and Reeves also noted that the volume of properties they are seeing let to tenants is up 67 per cent year on year and 22.7 per cent.
With a further revival now coming in the form of foreign tenant demand, the agency claims the outlook is extremely positive for 2022 and Benham and Reeves believes this confidence in the market will bring a further 5.5 per cent increase to rental values in addition to the market bounce back already witnessed in 2021.
Director of Benham and Reeves, Marc von Grundherr, comments: “The London rental market has arguably been the worst hit as a result of the pandemic and we’re unlikely to see a period of such unexpected uncertainty again in our lifetime. Demand for rental homes evaporate almost overnight during the pandemic causing a surplus of stock on the market while rental prices plummeted.
“But the London market is nothing but resilient and when the tide starts to turn, it turns very quickly indeed. We’ve seen house prices in the capital enjoy the largest monthly bounce of all regions in a single month having trailed the rest of the nation for almost two years and the same revival is also apparent across the rental market.
“Demand is lifting and rental values have not only recovered, but they’ve also exceeded levels seen prior to the pandemic. Even better still, we’re seeing further positivity in the trenches and this current market activity is yet to materialise at a topline level where market statistics are concerned.
“As a result, we can say with confidence that the London rental market decline is now firmly behind us and so any lower confidence forecasts of further price reductions can now be disregarded with yet further positive growth forecast for 2022.”