Following the fall in rental prices in London during the pandemic, what’s happening to London rents now?
Outside of London, the average monthly asking rent for new tenants has increased to a new high of £1,162. As new asking rents continue to grow quickly, this quarter’s increase of 3.2% marks only the third time in history that rentals have increased by 3% or more in a quarter.
This quarter, the average asking rent in London reached a new high of £2,343 per month. The capital now has the highest annual rate of growth of any region on record for asking rent growth, at 16.1%.
London Rents – supply and demand
Due to the severe lack of rental properties available and the extremely strong demand, which continues to outpace levels from last year in every region and country of Great Britain, the rate of asking rent growth is primarily due to these two factors.
Demand has increased by 20% since last year, although there are 9% fewer rental properties overall. Tenants looking for a place to live are facing increasingly tough competition as a result of this growing disparity between supply and demand.
In contrast to the rest of Great Britain, where the number of new rental properties has increased across the board, London has witnessed a 24% decrease in new rental properties since last year. The South West (+19%), Yorkshire & The Humber (+12%), and Wales (+10%) have seen the largest increases.
However, it does at least give tenants in many locations more choice compared to last year, even though they are highly likely to still be fighting for the property with many other renters. There is still some work to be done to close the gap between supply and demand sufficiently to stable new asking rents.
The average monthly mortgage payment for a new first-time buyer putting down a 10% deposit is now a fifth (20%) greater than the rental payment for the similar type of home – £1,121 pcm for the mortgage payment compared to £932 pcm to rent. This is true even with record rents.
You may be interested to read other article, ‘The UK needs 230,000 new rental properties to meet demand’.