HomeLet shows London rents continue to fall due to lower demand – reactions

The latest Hometrack Rental Index, shows that:

  • Rents in the UK rose by 2.1% in September compared to the same month a year ago; the average monthly rent now stands at £987a month
  • When London is excluded the average rent in the UK is now £828, this is up by 3.9% on last year
  • Average rents in London were £1,646, down by 2.8% on last year, the fourth decrease in annual variance in subsequent months
  • HomeLet’s September Rental Index reveals that rents rose in 10 of the 12 UK regions covered in the research
  • The South West shows the largest yearly increase of 6.6% between September 2019 and September 2020

Managing Director of Barrows and Forrester, James Forrester, commented: “We’re yet to see demand for UK rental properties decline across the vast majority of the market, despite the issues posed by the wider pandemic such as an increase in unemployment and a heightened level of rental arrears.

“While we did see a fall in rental prices following lockdown, an easing of restrictions has seen the market bounce back at a similar rate to that of the housing market.

“This has been due to those who were stuck in limbo being able to resume with their rental plans and as always, an insufficient level of stock to meet this demand has seen rental prices climb sharply with the more affordable regions of the UK performing much better.”

Director of Benham and Reeves, Marc von Grundherr, commented: “The ongoing threat of the coronavirus continues to impact demand across the London rental market, with central London hit particularly hard.

“The market had started to build a slight head of steam as the government encouraged a return to the workplace. However, the swift change of tune just weeks later has caused a secondary slump and one that is hitting rental prices quite hard.

“The London market is suffering on two fronts. Not only is domestic retinal demand waning, but we’ve also seen a reduction in foreign rental demand which is delivering a second blow. While we continue to see tenants register their interest from foreign shores, the restrictions around travelling continue to see many sit tight rather than making the move.

“As a result, agents are slashing rents by as much as a third in an attempt to entice tenants and recoup some form of income for their clients.”

UK and Ireland Country Manager of Spotahome, Nadia Butt, commented: “We’ve seen a sharp decline in movement by foreign tenants to the capital pretty much since the start of lockdown and this is undoubtedly hurting the London rental market where top-line rental costs are concerned.

“Many companies are freezing their plans to hire in the face of economic uncertainty while many more are adapting to a digital workplace and so the requirement to actually live in London isn’t as strong as it was prior to lockdown.

“We’ve also seen an influx of stock to the London market and this is causing rental prices to drop against a backdrop of lower demand. This additional stock is coming largely from the short-term let space, as leisure and tourism demand across the capital has all but dried up.”