London Rents on the Rise: Why 2022 Could Be a Great Year for Landlords
It has been a tough couple of years for landlords as the rental market was badly hit by the knock-on effects of COVID-19. But for London landlords there is hope on the horizon as the average monthly rent is on the rise, recently reaching its highest level in 13 years.
Market research shows that despite the number of homes to let in the UK being 43% below the 5-year average, this has led to an increase in demand and rental rates. Between July and September 2021, the average rental rate in the UK increased by 4.6% year-on-year. That’s a rise of 3% compared to the previous three months.
The average monthly rent in London for this period stands at £1,592, taking an average of 19 days to let a property. Since the start of the pandemic, the rental market in London has been affected by a number of tenants leaving the city, but there are signs, however, that people are returning to the capital. Average rental rates in London had previously continued to decline for 15 months, but increased year-on-year by 1.6%. Significantly, in the last quarter alone, rental rates rose by 4.7% due to the resurgence of rental demand in London.
Low supply and high demand
The data also suggests that rates have risen due to a combination of higher rents and tenants moving into larger, more expensive properties. Spending more time at home during the pandemic has led to tenants and house buyers looking for bigger living spaces.
Households looking for greater flexibility with their rental accommodation, such as city workers and students, are returning to the market after lockdowns in 2020 and this has had a direct effect on demand levels in London and many major cities across the UK.
A combination of higher taxes, such as the 3% stamp duty surcharge on additional properties, and stricter regulations introduced by the government over the past few years has also contributed to the shortage of rental properties, as a number of landlords left the buy-to-let market.
Looking ahead to 2022
Monthly rents in the UK now account for around 37% of an average income for a single tenant, which is the same as the 5-year average. And looking ahead to next year, the shortage of rented homes and continued employment growth means rents are likely to continue to rise.
Rental demand will likely slow due to traditional seasonal trends, but the demand for rented properties will continue to grow, especially in cities like London, where post-lockdown a certain amount of pent-up demand is now coming to the fore.
Data suggests that London rental growth could be as high as 3.5% in 2022, with rents eventually exceeding levels seen before the pandemic began. This is good news for landlords and means it could be a good time to consider expanding your portfolio.
Looking to Let Property in North West London?
If you’re looking to let out your property in the North West London area, Regal Estates can help. We have extensive experience in the North West London rental market, helping landlords successfully let their properties. We offer a range of lettings services from let only to full property management. Contact us today on 020 8459 2530 or email firstname.lastname@example.org.