As vibrant as the London property market is, it has not been immune to the effects of the pandemic. Covid-19 has resulted in lockdowns globally as governments scramble to contain the spread of the virus. These lockdowns have impacted the global economy. Some cities have reopened and, like London, are trying to move on.
This article looks at the impact of Covid-19 on the rental market in London.
Bigger Apartment Became More Popular During Covid
As far as the property rental market is concerned, London is the centre of attention because of its status as a capital city and a global business centre. The London property market had grown to £8.13 trillion before the pandemic, representing 18.53 percent of the UK’s property value. However, it appears Covid-19 has made property renter reassess their priorities.
According to the online renting portal, Zoopla, there have been changing patterns in working and commuting, leisure and tourism. This resulted in an easing of rental demand in city centres in the UK, including London.
Zoopla reports a fall in rents that started before the pandemic accelerated as more tenants went to properties with more indoor and outdoor space. This trend is not surprising, given that three successive lockdowns within ten months forced people to spend more time at home, giving them more opportunities to appreciate their current living circumstances.
Londoners Fled The Capital During The Pandemic
In London, demand for rental properties dropped 10 percent year on year, thanks to the combined effect of more people working from home, reducing international travel, and a pause in tourism. People even left the capital city, with a study suggesting that 700,000 people joined the exodus out of London. Greater London experienced its steepest annual decline at 8.3 percent.
This is good news for renters but nothing to cheer about for landlords who had grown used to the continuous increase in prices pre Covid.
In a trend that shows people are abandoning the centre of London, areas like Kensington and Chelsea suffered 12.3 percent in the rental market while the outskirts like Havering saw a growth of 2.6 percent and Enfield had 1.1 percent.
“The events of the past year have had a big impact on rents in London, with the more central areas being hit the hardest as tenants are no longer tied to their workplaces and have been free to seek the larger properties and lower prices found slightly further out,” Richard Davies, head of lettings at London-based estate agency Chestertons, said.
However, as more companies reopen their offices and remote working reduces, rental may migrate back to smaller living spaces and reduce demand for larger apartments in the outskirts of the capital city.
According to Grainne Gilmore, head of research at Zoopla, “Changing working, commuting, and tourism patterns were felt very quickly in the central London rental market. Now we are seeing the impact in other city centres, although on a more modest scale.”
Expat Renters Paid More For Rent
Internationally, London maintained its position as the most expensive city for renting a property in Europe for the fifth year in a row. Globally, London came fourth, according to data from ECA International.
Interestingly, expats in London did not experience a reduction in renting prices. Instead, they paid £56 more per month, although this was less than the increase of £121 per month that they experienced in 2020. Expats now pay about £5,364 per month for the average 3-bedroom, mid-range home in a prime London location. However, expats may end up paying less by moving out of centre London.
According to Alec Smith, Accommodation Services Manager at ECA International:
“As expected, the Covid-19 pandemic is set to influence rental prices in London, but the full extent of this is still yet to be seen. Future falls in rents are expected in prime central districts, and it’s likely some level of remote working will remain across many industries post-pandemic. A central location is therefore likely to move down the list of priorities for many expat renters, with larger properties and outdoor space becoming more attractive.”
Conclusion
If you are looking to purchase or sell a property in the post Covid UK, please feel free to contact us or visit our website at TRPE- The Real Property Experts. We have properties for sale in every area in the UK and our expert team members can help you every step of the way.
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