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Private rents in some parts of London have plummeted by as much as 20% as tenants left the capital, the number of international students plummeted and companies suspended relocation plans.
A glut of rental properties on the market means that many homeowners have had to cut rents to attract tenants. While leading real estate agents say average rents in London are down perhaps 4% from the previous year, or between 6% and 7% in so-called ‘prime’ areas, these figures mask much larger drops in certain locations as Covid-19 continues to wreak havoc on the rental market.
Glen Cook of London-based sales and leasing agent Hamilton Brooks said rents in and around the Barbican property area “had probably fallen 20% since closing,” though he added that “Now they were increasing again.” . Rents in Bloomsbury and Clerkenwell “have probably fallen by at least 10%” in recent weeks, according to a local rental agency.
And the phenomenon is not limited to London. Data released by estate agent Hamptons this month showed that demand from people looking to rent in urban locations in Britain is down 23%. He said that the average monthly rent for a newly rented property in London was down almost 4% from the previous year, but that monthly rental costs also fell in cities in the Midlands and the North of England.
In London, it’s not just prime locations that are seeing a sharp drop in rents – an analysis of Rightmove listings shows that Tooting in South London is one of the areas that has seen big drops. A four-bedroom house in Upper Tooting that was trading at £ 2,850 a month in mid-July is now at £ 2,500 a month, a reduction of more than 12%. Similarly, a one-bedroom property near Tooting Bec common that was trading at £ 1,450 a month at the end of July is down to £ 1,285, a cut of almost 11.5%. Meanwhile, a two-bedroom flat in Tooting that was trading at £ 1,450 a month in early August has had £ 100 cut to £ 1,350.
The drops may not come as a surprise after a multitude of polls suggesting that many city dwellers have already moved or are planning to move after concluding that home work is here to stay. Some have moved with their parents or have moved to places that are not only cheaper but offer more space or better access to the field.
Aneisha Beveridge, head of research at real estate agent Hamptons International, said that with many people’s priorities shifting, tenants had joined landlords in the “race to the suburbs.” Other factors that helped lower rents include corporate relocations that were suspended in the wake of the pandemic and Airbnb investors, hungry for tourists, deciding to put their apartments on the longer-term rental market.
The sharp drop in the number of foreign 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 homeowners.
Chestertons, one of the capital’s largest rental agents, said that between June and September, 30% of its tenants in central London were generally international students “on generous budgets.” This figure was even higher in areas 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, the firm said, highlighting a report published in June that warned of “a potential drop in international students from 50% to 75%. ” this autumn.
Cook, however, said Hamilton Brooks had seen a significant number of foreign students arrive in recent weeks, many of whom were “very wealthy.” He said he had just rented a studio at the Barbican that would normally have rented for £ 375 a week for £ 315, which is equivalent to a 16% cut. And earlier this month, a student rented a one-bedroom Barbican flat that would sell for around £ 1 million for £ 550 a week without furniture. “That would normally go to the hands of a businessman or a woman. It used to be rented at £ 625 a week, ”Cook said.
Luxury real estate agent Savills said that in some London locations, particularly those with many 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, director of the firm’s leasing team, added: “We are seeing strong demand from people who want to walk to work. They see this period of limbo before the offices are fully operational as an opportunity to perhaps rent a slightly larger space or negotiate a small discount. “
Similar trends were being observed in other markets in the city, where properties with gardens or space to work from home were the most in demand.
“In Manchester, for example, so far we have seen fewer students registering for the start of the quarter, which means that rents are softer as a result,” Parker said.
