London asking rents hit record high as available properties dwindle
- Average asking rents in London rose to an all-time high by the end of 2018, surpassing the previous peak from almost three years ago in Q1 2016:
- Asking rents in the capital are now increasing at an annual rate not seen since Q1 2015
- Compared with this time last year, available rental stock in London is down 22%
- Nationally outside London, there are 10% fewer rental properties marked available compared to this time last year
- Rightmove predicts that asking rents will rise by 3% outside London, and 4% in London in 2019
- Hertford saw the largest rise in demand from tenants over the past year outside London, while East Ham has seen the biggest increase in demand in London
The flood of rental properties that came to market in the capital between 2016 and 2017 helped to curb rental prices for a few years, with asking rents dropping to and staying under £2,000 per month for almost three years. Now, the subsequent drop in buy to let activity and increased demand from tenants has led to a lack of choice for tenants and rents rising to a new record of £2,034 per month, surpassing the high of 2016.
Rightmove’s Commercial Director and Housing Market Analyst Miles Shipside comments: “The increasing rents in London reflect that demand has been exceeding supply over the past year. When the Government introduced higher stamp duty on second home purchases back in 2016, it deterred many landlords from investing in the buy-to-let market, which in turn has exacerbated this ongoing dearth of available properties, and we’re yet to see any significant boost in stock from the many build-to-rent programmes. In addition, the more punitive treatment of tax reliefs has meant some landlords are also exiting.”
Outside London, it’s places in the North West that have seen the biggest increase in tenant demand, with six towns from the region making the top ten this year. The top five include Hertford, Bootle, Bracknell, Winsford and Prenton. In the capital, East London dominates the top five, which comprised East Ham, Forest Gate, Biggin Hill, Elephant and Castle and Chadwell Heath.
Hayes, Notting Hill, Hammersmith, Canary Wharf and Highgate made it into the top five London areas where asking rents have increased the most, with Newbury, Swansea, Dundee, Dudley and Hinckley being the spots where asking rents have risen the most across the rest of Great Britain.
Shipside observes: “We forecast that average asking rents will continue to slowly strengthen further in 2019, by perhaps 3% outside London. In the capital there are no signs of an increase in buy-to-let activity, which may lead to asking rents growing further by around 4%. A mutually beneficial plan for both buy-to-let landlords and tenants is to strike up a genuine rapport. It eases landlords’ concerns if they have a tenant in situ for several years, while a tenant with a good relationship with their landlord will stand a better chance of negotiating more favourable rents.”