The rush for space to work and relax at home will still dominate the short-term rental market at least, despite the pandemic that appears to be abating across much of the country.
This is the point of view of Savills who surveyed its predominantly high-end tenant clients to find that despite more workers at their desks, private outdoor space (72 percent) and space to work from home ( 66 percent) continue to rank in the top two priorities for top tenants.
These precede traditional “must-haves” such as proximity to good transport (now only 53% important) and proximity to the workplace (31%).
“The easing of pandemic restrictions – including international travel and a significant increase in demand from businesses and students – over the past three months has played a major role in the upturn in the quality rental market,” comments Jessica. Tomlinson, Research Analyst at Savills.
“But as prices pick up, tenants’ attitudes and ownership preferences have definitely changed. Many tenants may be willing to forgo proximity to their place of work and a good education for a private garden and more space to work from home, which will continue to impact areas of London that are experiencing the highest long-term growth.
“Even though it is in its early stages, the outlook is positive for more central locations. We expect an even stronger return to rental growth in the capital for the rest of the year and a stronger rebound in 2022. “
The agency says that despite the continuing race for space, in prime London there is some recovery in apartment rents; growth in apartment rents outperformed homes over the past three months for the first time since december 2019.
Savills says that in major suburban belt rental markets, growth in cities is now 8.0% higher than in villages, towns and rural areas.
Amelia Greene, director of the prime lettings team at Savills, comments: “The return of international travel, combined with a complete relaxation of restrictions, has sent the prime rental market into a frenzy. Demand is on the rise across the board – and nearly all branches are reporting tenders. The hot spots in north and east London have been particularly popular due to the desire of workers to walk to the office and the return of students to the capital.
“In some cases, tenants make sure they are the most attractive candidate by paying for a full year in advance, or by committing to blind properties. As a result, we have seen a huge pendulum swing in favor of homeowners and almost every homeowner expects rental prices to rise. Now is the best time to put a property on the rental market.
Rents for prime suburban belts are now up 6.8% year-on-year as tenants anticipate the continuation of hybrid ways of working.
Outdoor commuter locations saw the strongest growth in the quarter, led by Henley, Windsor and Cambridge.
Suburban locations and those in the inner suburbs of London, such as Tunbridge Wells and Sevenoaks, continued to experience notable annual increases of over 12% and 9% respectively.
Amelia Greene continues: “Locations in the suburbs of London have seen exponential price growth over the past year, due to high demand from tenants leaving the city in search of more space. Now we’re starting to see the number of applicants tapering off and central London locations intensifying. However, a severe shortage of inventory will continue to support price increases in the near term. ”