London rental market in Q4 2021 has continued its recovery, thanks to the return of office workers and Foreign students in September 2021 to the capital. This has led to a renewed demand for rental properties, in particular flats, and low supply has driven asking prices to higher levels than before the pandemic started.
Tenant demand continued to be really high at the beginning of 2022. The imbalance between supply and demand is set to continue until more choice comes onto the market for tenants, with a prediction of a further 5% increase in average asking rents in 2022.
London’s rental growth has been underpinned by the return to popularity of flats. Average rents for this property type fell during 2020 as the impact of the pandemic took its toll on city living. The last 12 months has seen a complete turnaround, with average rents for flats growing at the fastest pace since Autumn 2021. Average rents for all property types have increased in London over the last 12 months, with detached properties continuing to maintain the strong growth seen since the start of the pandemic.
The surplus of available rental stock that accumulated due to the pandemic has now plummeted and this has been driven by a staggering return to the workplace and, in particular, a huge influx of demand from overseas students. We’ve also seen a huge increase in the number of tenancy renewals which have even exceeded 2019 levels. Tenants are moving less frequently, further limiting supply.
Landlords understand the importance of having a good, long-term tenant and there is a limit to what renters can afford to pay, which will prevent rents from rising at the same rate we’ve seen over the past year. High inflation combined with high energy prices will surely affect prospective tenants’ rental budget. The average salary in London is £39,716 (from £40,994 in 2020), meaning that Londoners typically spend 42.05% of their monthly income on rent.
- In Q4 2021, average rents in London increased for the second consecutive quarter, rising by +6.1% from Q3 2021.
- Year on year, London asking rents rose +10.9%.
- The top five most expensive and less affordable London boroughs are: City of London, Kensington & Chelsea, Islington, Westminster, and Wandsworth.
- Average yields in London are at their highest since 2015 at 4.6% (+0.4% YoY).
GREATER LONDON AVERAGE ASKING PRICES FOR ALL TYPES OF PROPERTIES
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Q4 2021 INNER AND OUTER LONDON
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