Private rents in some parts of London have tumbled by up to 20% as tenants quit the capital, the number of international students plummets and companies put relocation plans on hold.
A glut of rental properties on the market means many landlords have had to slash rents in order to attract tenants. While leading estate agents say average rents in London are down by perhaps 4% on a year ago, or 6% to 7% in the so-called “prime” areas, these figures mask much bigger falls in certain locations as Covid-19 continues to wreak havoc on the lettings market.
Glen Cook, at the sales and lettings agent Hamilton Brooks, based in the City of London, said rents in and around the Barbican estate area had “probably dropped 20% since lockdown”, though he added that they were “now creeping up again”. Rents in Bloomsbury and Clerkenwell “have probably fallen by at least 10%” over the last few weeks, according to a local lettings agency.
The sharp decline in overseas students is one of the main factors behind the current glut of rental properties in the capital
And the phenomenon is not restricted to London. Data released by estate agent Hamptons this month showed that demand from people looking to rent in city locations across Britain is down 23%. It said the average monthly rent for a newly let property in London was down nearly 4% on a year ago, but that monthly rental costs were also on the slide in cities in the Midlands and the north of England.
In London, it is not just prime locations that are seeing rents fall sharply: an analysis of Rightmove listings shows that Tooting in south London is one of the areas that has seen some big falls. A four-bedroom house in Upper Tooting that was listed at £2,850 a month in mid-July is now on at £2,500 a month – a reduction of more than 12%. Similarly, a one-bedroom property near Tooting Bec common that was listed at £1,450 a month in late July has been reduced to £1,285 – a cut of nearly 11.5%. Meanwhile, a two-bedroom flat in Tooting listed at £1,450 a month in early August has had £100 lopped off at £1,350.
The falls may come as no surprise after a multitude of surveys suggesting that many city dwellers have either moved out already or are planning to do so after concluding that home working is here to stay. Some have moved back in with parents or have relocated to places that are not only cheaper but offer more space or better access to the countryside.
Aneisha Beveridge, head of research at estate agent Hamptons International, said that with many people’s priorities changing, renters had joined homeowners in the “race to suburbia”. Other factors helping to push down rents are corporate relocations being put on hold in the wake of the pandemic, and Airbnb investors, starved of tourists, deciding to put their flats on to the longer-term rental market.
The sharp decline in the number of overseas students is one of the main factors behind the current glut of rental properties in the capital. The student market has become increasingly important to London landlords.
Chestertons, one of the capital’s biggest lettings agents, said that between June and September, 30% of its central London tenants were usually international students “with generous budgets”. This figure was even higher in areas most popular with international students or near major universities, such as Bloomsbury and Camden. But lockdowns and travel restrictions in the UK and around the world have had a dramatic impact, said the firm, which highlighted a report issued in June that warned of “a potential drop in international students of 50% to 75%” this autumn.
Cook, however, said Hamilton Brooks had seen a substantial numbers of overseas students arrive in recent weeks, many of whom were “very wealthy”. He said he had just let a studio flat at the Barbican that would have normally rented for £375 a week for £315 – amounting to a 16% cut. And earlier this month a student took a one-bedroom Barbican flat that would sell for about £1m for £550 a week unfurnished. “That would normally go to a businessman or woman. It was let previously at £625 a week,” said Cook.
The upmarket estate agent Savills said that in some London locations, particularly those with a lot of offices, such as Wapping and Canary Wharf, there were higher levels of stock, and average rents had fallen “by a few percentage points” this year.
However, Dan Parker, a director in the firm’s lettings team, added: “We’re seeing strong demand from people who want to walk to work. They see this limbo period before offices are fully back up and running as an opportunity to perhaps rent somewhere a little bigger or negotiate a small discount.”
Similar trends were being seen in other city markets, where properties with gardens or work-from-home space were most in demand.
“In Manchester, for example, we’ve so far seen fewer students checking in for the start of term, meaning softer rents as a result,” said Parker.