Flood of rental homes drives inner London rents to record lows

With a lack of tourism and companies relocating their staff to the UK, landlords who run short-term lets have been changed tactics. To fill their properties they are targeting traditional renters, increasing choices for tenants and driving rents down.

Hamptons found that in July there was a 26 per cent year-on-year increase in the number of homes available to rent in London, the only region in the UK to record a rise.

Almost all this increase took place in inner London where the number of homes to rent rose 42 per cent on last year.

Of the 20 local authorities which saw the highest proportion of short lets now being offered on the long-term rental market, 16 were in the capital.

Between the lifting of lockdown in late May and the end of July, 12 per cent of homes that came onto the rental market in Zone 1, central London, had previously been let on a short-term basis. Across London as a whole, the figure stood at 5.1 per cent over the same period.

And while landlords may have a better chance of filling their properties if they look to attract traditional renters, the switch away from the short term market means on average they will see a 35 per cent reduction in rent, or £1,952 a month less.

Aneisha Beveridge, head of research at Hamptons International, said: “For years there had been a steady stream of landlords moving from the long to the short let market in search of higher returns.

“However following lockdown and in the two months since late May, this shift has been completely reversed with growing numbers of landlords looking to secure longer-term tenants.

“This is particularly evident in urban tourist and corporate relocation hotspots, nowhere more so than central London. And with three-quarters of landlords who have secured a long-term tenant signing 12-month or longer contracts, they are unlikely to return to the short let market any time soon.

“However the rising popularity of UK holidays has meant that rural and coastal areas have kept the short-let market outside of urban areas more buoyant.”

National picture

The picture is different across the rest of the country, however.

In regions around Great Britain there were seven per cent fewer homes available to rent last month compared with the same period last year.

Rents in Great Britain remained flat in July. Last month, the average cost of a newly let property in Great Britain fell slightly to £1,001 pcm, 0.1 per cent lower than the same month last year.

However this is a slight improvement on the 0.7 per cent year-on-year fall recorded in June.

Once again, rental growth was dragged down by rent falls in London, the South East and East of England.

Rents in London fell 4.2 per cent year-on-year in July, driven by an 8.4 per cent decrease in inner London.

Meanwhile in outer London, rents fell 2.9 per cent compared with the same period last year, a slight improvement from the 3.6 per cent fall recorded the previous month.

However outside of London and its immediate neighbouring regions, rents continued to rise.

The South West saw the biggest rental increase – average rents rose 2.8 per cent year-on-year in July. The Midlands followed with 2.3 per cent annual rental growth.