Why Londoners should look to Re-negotiate their Rent fast
According to a report published by flatshare platform Spareroom this year showed that the demand for rental properties dropped by 43 per cent in London last year. London last year was the only major city in the country to suffer a decline in rental demand. Another report published by property data company LonRes showed that houses in the most expensive parts of the capital are having to wait over two months before finding a tenant, the longest wait since the financial crisis.
West Central London saw the most significant decline with a year-on-year demand falling by 43 per cent; East Central London saw a drop of 39 per cent, and East London saw a fall of 19 per cent in rental demand.
In contrast, the demand in commuter belt areas soared as people look to move outside of the capital for more outdoor space and larger homes. As Southend-on Sea saw a 54 per cent increase in rental interest, followed by Luton at 39%, Milton Keynes saw the demand increase by 33 per cent and Reading by 27 per cent. A senior analyst at Hamptons suggests that about a third of tenants left the capital last year.
However, this is not entirely down to people moving outside of the capital in search of more outdoor space or bigger houses.
So why is London rental demand so low?
Mass Population Migration:
Andrew Wishart of Capital Economics says that their analysis suggests a sudden drop in population last year has led to a considerable rise in London's vacancy rates. According to Capital Economics, the British population may have dropped by as much as 2 per cent in the past year as work dried up and foreigners left, with most of the outward migration going from the capital. If this is the case, then that would mean close to 150,000 people leaving London, which would explain the fall in rental demand in the capital.
Market Driven by International Migration:
Along with other major metropolitan cities across the world like New York, Tokyo and Shanghai. London's market is very heavily driven by international migration. According to a Central London agent Kinleigh Folkard and Hayward says that there has been a massive influx of holiday lets as the Airbnb market and all those other avenues that would have previously catered for a more international clientele have now been forced to come back to a more traditional lettings market, so that has led to an increase in the supply of rental properties. An increase in supply and low demand in the capital is one of the significant reasons for rents falling so sharply.
When will the demand return?
While the demand for rental properties in London declined dramatically last year, the market will return to previous levels once the majority of the population is vaccinated and international travel resumes. The trend to urbanisation might have paused during the coronavirus lockdowns, but it will return quite strongly as people will want to live in a city.
However, there is still some time before the demand returns to pre-pandemic levels, and it could be the autumn of this year until the market fully returns to normal. So, this is an excellent opportunity for anyone with a rental lease coming to an end to re-negotiate their rent at a lower rate or someone looking to move to London not so long into the future to make a move sooner rather than later. The rental demand might be low in London at the moment, but it will not be low for very much longer, so this is the best time to re-negotiate a rental lease to take advantage of the dip in the market to make it work in your favour.