Rental values in the capital not only rebounded from the pandemic low of 2020, but they have also exceeded pre-pandemic levels in all but three areas.
Benham and Reeves’ research shows that between 2019 and the initial pandemic year of 2020, the average London rent fell 3.4%.
The impact was far greater in many parts of the London market, with Camden seeing rental values drop 20.7% in one year, while the City of London was also one of the hardest hit with a 12.6% reduction.
However, as the capital slowly resumed operations in 2021, demand from tenants has also returned, and current rental values are now 9.4% higher than they were in 2020.
The pandemic continues to have an influence, with the boroughs bordering London still recording the best performance. Rents are up 20.1% year-on-year in Kingston, with Bexley (18.3%), Newham (15%), Croydon (14.1%) and Hillingdon (13.6%) also among the most large increases.
Meanwhile, the City of London remains the only area to recover, with rental values still falling by 11.4% per year.
While a rebound from the pandemic decline is encouraging, the real positivity is that the average London rent is now 5.7% higher than it was in 2019, before the market downturn.
In fact, only the City of London (22.5%), Camden (18.9%) and Westminster (4.6%) have yet to see rental market values return to pre-pandemic levels.
Benham and Reeves also noted that the volume of properties they see rented to tenants increased 67% year-on-year and 22.7% from pre-pandemic levels, while landlords are now guaranteeing prices. relocation of 10 to 20%. higher than they were before the Covid-19 epidemic.
With a further upturn coming in the form of demand from overseas tenants, the outlook is ‘overwhelmingly positive’ for 2022 and Benham and Reeves believe this confidence in the market will lead to a further 5.5% increase in rental values in more of the market rebound already seen in 2021.
Director Marc von Grundherr says it’s unlikely we’ll ever see such an unexpected period of uncertainty again in our lifetime.
He comments: “The demand for rental housing evaporates almost overnight during the pandemic, causing excess inventory in the market as rental prices plummet. But the London market is only resilient and when the tide starts to turn, it turns really, really fast. “
“We have seen house prices in the capital enjoy the biggest monthly rebound of any region in a single month after dragging the rest of the country for almost two years and the same recovery is also apparent in the rental market.”
He adds: “Demand is increasing and rental values have not only recovered, but they have also exceeded levels seen before the pandemic. Best of all, we’re seeing new positivity in the trenches and this current market activity has yet to materialize at a higher level when it comes to market stats.
“As a result, we can say with confidence that the decline in the London rental market is now firmly behind us and any weaker confidence forecast for further price cuts can now be ignored with further positive growth forecast for 2022.”