The number of prospective tenants in the capital has now surpassed the number of properties available to rent, according to the latest Propertymark research.
An average of just 126 properties are currently managed per branch in London, significantly lower than the national average of 196, while there has been a continual increase in the number of London-based prospective tenants, growing from 98 per letting agent branch in June 2020 to 148 during August 2021.
Supply and demand
This increasing gap between rental stock supply and demand is largely due to the knock-on impact of Brexit and Covid-related travel bans, with about 10% of the population leaving London in 2020. Many short-term letting agreements switched to long term rentals in that time, creating extra stock in London as demand was falling. This has resulted in a drop in rental value by as much as 30%.
Greg Tsuman, lettings director of Martyn Gerrard Estate Agents, says Section 24 changes and extra stamp duty on second homes has meant that landlords are paying more tax than ever before, while the pending changes to energy efficiency rules will also bring further costs to landlords. He adds: “As a direct result we expect rents to climb. To stop this trend, and for landlords to return to the London private rented sector, the UK government needs to review its tax policies for landlords and introduce policies that support investment in the sector.”
The capital’s short-term rental sector is continuing to perform very strongly, according to the latest tracking data from STR and the UK Short Term Accommodation Association. Short term rentals averaged 71.2% occupancy for August – an uplift of 4.2% in July and 36.9% up year-on-year. Short-term rentals are also achieving better rates than hotels and serviced apartments at £138.20, down 6.2% in July but up 12.3% year-on-year.