Rents fall 5% in London, but rise across the UK
Average rents in London have fallen by 5.2% over the last 12 months, according to Zoopla, reaching levels last seen in 2014.
But the picture is different across the rest of UK, according to the property portal, where rents have largely been resilient. Despite the challenges faced by the impact of Covid-19, there has been 1.7% growth outside the capital in the last year.
Demand from renters is still high across the UK, up 20% on last year, but tenants are looking for rented houses rather than flats, and properties with outside space, as more of us work from home.
The latest Zoopla report reveals Covid-19 has led to a ‘firmly entrenched two-speed rental market’, with marked differences between the performance of rental prices in London and the rest of the UK.
This fall in demand from renters in London is being felt more acutely towards the centre of the capital, with rents still rising in some outer London boroughs such as Bexley (3.8%), Havering (3%) and Sutton (2%).
Other areas to have declined include Edinburgh, which is also a tourism hub and has seen a 1.6% decline with the shift from short-term to longer-term lets.
Much of the rest of the country is performing strongly, said Zoopla. In particular there is strong rental growth in many cities including Bristol 3.1%, Glasgow 2.4% and Cardiff 1.8%, as demand levels continue to outstrip supply.
Search for space
The search for space, first seen in the sales market, is now being firmly replicated by renters.
Zoopla’s top searches for rental properties include the terms gardens, parking, garages, balconies and pets, reflecting a need for outdoor space and freedom necessary to cope with lockdown.
Gráinne Gilmore, Zoopla’s head of research, said: “The split in the rental market caused by COVID-19 has now crystallised and we are seeing the two-speed market firmly entrenched.
“For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth. We haven’t seen the exodus of students from cities and, as more people are staying in the rental market given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents. At the same time however, muted earnings growth will start to limit the headroom for rental growth in some markets.
“The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown.”