The cost of renting a room dropped by 4.7 per cent across the capital in the winter when the virus gripped (to £692 per month) and by as much as 13.4 per cent in central London (to £739).
The expensive inner core of the capital was hit the hardest during the coronavirus crisis as young tenants stuck working-from-home with flatmates did not renew their rental agreements. Overseas students also left.
New data published today by Hamptons shows that the capital’s rental market has finally turned a corner. As the UK reopened last month, rents stabilised across Greater London but rose 4.1 per cent in Zones 1 and 2 in the year to July, taking average room rents in these central areas to £803 a month.
“Many students and young graduates, who make up the biggest source of room rental demand in the capital, temporarily left London last year to move back in with family during the lockdowns,” said Aneisha Beveridge, head of residential research for Hamptons. “The UK’s reopening has pulled many of these younger tenants back into the capital to work, study and socialise.”
Landlords were forced to reduce rents to compete with the Airbnb properties that flooded the market due to the lack of tourism, which also pulled room rents down.
TABLE: AVERAGE MONTHLY ROOM RENTS ACROSS LONDON
Olivia McSweeney, head of lettings at Rokstone Properties, reported “it’s becoming harder to negotiate cheaper rents and we’re seeing multiple bids on the best homes. It will be a shock for some of those moving back how quickly the market has flipped”.
McSweeney is seeing the return of international students to Marylebone (particularly from China and Europe) who are selecting homes via virtual viewing. They arrive and quarantine in the property if required by law.
The corporate relocations market is “still slow”, she continues, but there is some activity from Canadians and Russians returning to work in finance and tech.
The outer zones were less impacted during the pandemic than the inner areas. They are more affordable and offer bigger homes and gardens at a lower price.
Therefore the fall in central rents versus the resilience of outer rents means the cost gap between the two has shrunk. Those returning to renting in London will now find the average room rent in Zones 1 and 2 costs 16 per cent more than a room in Zone 3, down from a gap of 20 per cent in July 2019.
Renting a room in Zones 1 and 2 was at its highest in recent years in August 2019 at £866. This July the 4.1 per cent rise takes the average cost to £803. In Zone 5 rents have fallen from a high of £634 in September 2020 to £620.
The uptick in central London rents is also being driven by affluent families. “The luxury family housing market which typically looks for four- to five-bedroom properties has been strong with people securing rental homes before the start of the school year,” says Arron Bart of Aston Chase.
In the rest of the UK, rents rose in the first half of the pandemic until Christmas when they started to fall with the biggest monthly drop in June of 2.2 per cent. They nudged down again in July by 0.5 per cent to £593 per month.