Anyone planning to relocate to London will be wondering if the draconian measures required to control the spread of Covid-19 have impacted two crucial market factors: the supply of properties and rental prices in the capital.
So, how has the rental sector of the London housing market been fairing?
Reduction in prices
With demand in the rental market waning under the economic strain the pandemic has placed on society – between 7 March and 30 March, demand for rental properties fell by more than 55% – landlords were forced to drop prices for newly let properties.
Even in London – where, under normal circumstances, there is a much higher demand for private rented accommodation than the rest of the country – new rents dropped 1.3% in March.
Fall in supply
The typically fluid London rental market experienced a period of relative stasis in the wake of the announcement of the lockdown restrictions after 70% of private tenants shelved plans to move in March – the highest the figure has been since the financial crisis in 2008. This decision to stay put came as no surprise, as household incomes began to feel the strain of the pandemic – significantly reducing the supply of rental property available in the market.
Greater bargaining power
This lack of supply has its advantages: it has strengthened the bargaining potential of tenants – both new and existing. Take renters renewing their tenancies in London, for example, who experienced a 2.2% year-on-year drop in rent in March. This suggests that many tenants secured discounts from concerned landlords who had seen a saturated market evaporate at the start of the lockdown period.
What does the future hold?
The slowdown in the UK rental market has already begun to reverse, following a 30% surge in demand during the first two weeks of April. This is good news for anyone hoping their relocation plans will be back on track sooner rather than later. Whether there is enough supply to meet the demand is another matter. Either way, it’s predicted that the total number of home moves within the rental sector in 2020 will be around 25% lower than last year.
Fortunately, the rental market is more resilient in a crisis than the sales sector thanks to its flexibility. For example, letting agents can still agree contracts with delayed start dates, and innovative tools like virtual viewings are more practical for renters than homebuyers.
The popularity of the rental market – around five million households in the UK are currently renting – means it is expected to experience a rapid recovery once life begins returning to normal.
Get help from the experts
Simply London’s housing experts work with you to define your specific search criteria and select the best areas and properties to view. They can also take the hassle out of the rental agreement negotiations.
Our convenient virtual viewings service can help you overcome any concerns you have around social distancing during the Covid-19 crisis.