London rents are rising at a record pace with growth being driven by tenants returning from outside the capital.
That’s the suggestion from lettings agency Hamptons which states that over the last 12 months, rents in London have risen by 12.3 per cent, the fastest rate since the firm’s market index began in 2013.
It is also the second successive month that rental growth in the capital has outpaced the all-Britain average, reversing 26 consecutive months of London rents lagging behind the rest of the country.
So far in 2022, nearly one third of all new tenancies in the capital have been secured by someone moving from outside of London.
This marks a sharp rebound from 2020 when just 12 per cent of London tenants came from outside the capital – a time when many renters left the city to move back in with parents or rent in a more affordable area.
It is also the highest figure in at least a decade and compares to a five-year pre-Covid average of 23 per cent.
Inner London has become home to 65 per cent of these movers this year, up from a more normal 50/50 Inner/Outer London split.
Hamptons specifies that 55 per cent of tenants who moved into the capital this year came from Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent or Surrey.
This compares to a pre-Covid average of 40 per cent.
The shift in tenants moving into London from the Home Counties is also reflected in the distance tenants have moved: the average tenant coming to the capital moved 36 miles this year, down from 45 miles in 2019 and 50 miles a decade ago.
Fewer tenants making longer moves from large northern cities is partly behind the decline, suggests the agency.
Aneisha Beveridge, Hamptons’ head of research, 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 per cent above the average outside the capital. While this gap is up from 96 per cent a year ago, it remains below the 120 to 130 per cent 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.”