London’s private rental market experienced an unprecedented decline in popularity during the pandemic, as millions exited the UK’s biggest towns and cities in search of solace and safety elsewhere. Working from home became the new norm, and it was no longer necessary to pay extortionate prices to rent properties in and around London.
Today, data suggests the return to city life is well underway, as average London rent prices accelerate at their fastest pace on record.
This year to date, a full 30% of all new tenancies in London have been secured by individuals moving into the capital from other parts of the country. That’s according to the Hamptons Letting Index, which also indicates a massive 12.3% average increase in monthly rental costs in London over the past 12 months.
On average, it now costs £1,886 to rent a home on the private market in London, up from £1,680 per month this time last year.
The figures for Inner London are even more astonishing, where average monthly rent prices have skyrocketed by 22% over the course of 12 months. It now costs £2,513 to rent an Inner London home today, £500 more than a year ago.
An impressive rebound
The capital’s return to popularity and prosperity has been impressive, considering that just 12% of new tenants in London came from outside the city in 2020. After this, millions set their sights on more affordable rental homes outside London or moved back in with their parents temporarily to save money.
According to the figures from the Hamptons, most of those heading back into London are relocating from Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent, or Surrey.
Speaking on behalf of Hamptons, head of research Aneisha Beveridge said that the return to the new normal would most likely continue pushing average London rental prices higher.
“With COVID being pushed further to the back of people’s minds, life in the capital is slowly returning to its new normal. Tenants are returning to the bright lights of the city, and this is driving rental growth to record highs,” she said.
“The rise of remote working means that fewer tenants are moving to the capital specifically for work. In fact, a growing number of tenants choosing to live in London are working fully remotely and could live nearly anywhere in the country. The footloose nature of many jobs today means that it will be culture and lifestyle rather than employment that become the capital’s biggest draw.”
“The current pace of London rental growth is predominantly down to the capital playing catch up with the rest of the country.”
“Today, the average rent in London stands 103% above the average outside the capital. While this gap is up from 96% a year ago, it remains below the 120–30% pre-COVID premium, which has been eroded by strong rental growth outside the capital in recent years. But the current pace of rental growth in London is likely to push the premium closer to its pre-COVID level within two years.”