Landlord's guide | October 2023

The rental market in London is a dynamic sector that continually experiences fluctuations influenced by economic conditions, government policies, and shifting tenant preferences. As we explore the current state of London's rental market in 2023, it’s evident that the landscape is shaped by a multitude of factors.

RENTAL PRICES AND AFFORDABILITY. Rental prices in London have been consistently high, and 2023 is no exception. According to data from Zoopla, In the past two years, following the reopening of the economy after Covid-related lockdowns, the average monthly rent in London has seen significant increases of around £490 per month. As a result, the average rent in the capital now stands at £2,001. Currently, the eastern boroughs of Newham, Greenwich, and Tower Hamlets have recorded the highest annual increases in rental prices. Newham experienced an impressive growth rate of 18.1%, closely followed by Greenwich at 18.0% and Tower Hamlets at 16.5%. On the other hand, residents living in the suburban areas and western fringes of central London have observed a relatively lower level of rental growth. Kensington and Chelsea, known for its affluent neighbourhoods, reported the weakest annual rental inflation rate at 10.2% (still not to be mocked though). Similarly, Havering and Richmond experienced modest growth rates of 11.3% and 11.4% respectively. These figures highlight the contrasting rental trends within London, with the eastern boroughs witnessing the highest rate of rental growth, while the suburbs and western areas experiencing more subdued increases.

According to data from Zoopla, in the past two years, (...), the average monthly rent in London has seen significant increases of around £490 per month.

SUPPLY AND DEMAND. Demand for rental properties in London remains strong due to its reputation as a global business and cultural hub. However, the supply of affordable housing continues to be limited, contributing to the rental market's inbalance. The pandemic played a role in the market dynamics as shortterm rental properties shifted to long-term options due to travel restrictions, and this, combined with many landlords selling up in the face of rising mortgage costs, a summer rush and many people returning to London has led to a brutally competitive rental market. “Rents will continue to rise ahead of incomes unless we see a sustained increase in rental supply or a material weakening in demand, both of which appear unlikely,” said Richard Donnell, executive director at Zoopla, earlier in the year. And the Financial Times reported recently that the amount of rental property listed on Zoopla was 33% lower than before the pandemic, leading to rentals disappearing from the market within hours.

SHIFT IN TENANT PREFERENCES. Tenant preferences have witnessed a notable shift in recent times. The rise of remote work and changing lifestyles have led some individuals to seek larger properties in the outskirts of London, where space and green areas are more abundant. However, central neighbourhoods still hold their appeal due to their vibrant social scenes, proximity to amenities, and the convenience of commuting to work. Additionally, sustainability has become an important factor for renters, with a growing preference for energy-efficient housing options, where they have choice.

To see the rest of our Q4/23 Magazine, click the link below to view the articles online:

https://issuu.com/briklondon/docs/brik_magazine_-_2023_-_q3?fr=xKAE9_zU1NQ

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