Rental Market
Winter 2020

Rental Market Figure 1In the year to December rental values across London rose by 1.2%, the highest annual rate of growth since August 2017. According to the official Index of Private Housing Rental Prices this represents the 13th consecutive month of positive price adjustment across the market. Against a backdrop of low supply, as policy changes continue to impact the buy-to-let investor market, and continued tenant demand, it is unsurprising that at 2.2% price growth across the capital’s rental market is anticipated to outpace the sales market over 2020.

Rental values across prime central London also continue to edge upwards, up 0.7% year-on-year according to Knight Frank, with price growth across prime outer London standing at 0.4%. LonRes report new instructions to the market in prime central London fell 4.2% in 2019 year-on-year, with instructions during the final quarter down 10% over the same period, their lowest level in six years, as many awaited the election outcome. Heightened confidence in, and a return to capital growth across the sales market is likely to exert downward pressure on stock levels over the coming year as prospective landlords may well choose to market for sale not rent.

Rental Market Figure 2Prices however will remain underpinned by tenant demand which is set to remain steady, especially across the core market (<£1000 per week). Knight Frank report there is an average of 7.5 new tenants per listing for properties marketed at <£1000 per week, compared to just 3.4 for those marketed at £1000-£4000 per week. Throughout 2019, 69% of tenancies across prime central London were let for less than £1000 per week, an additional 28% let between £1000-£4000 per week, with Knight Frank reporting annual price growth across the lower price brackets continues to outperform the market as a whole. The average price for a property across the capital is now £1697 per month, rising to over £3000 across the prime residential districts of Kensington & Chelsea and Westminster, with prime properties (top 25%) attracting rents in excess of £5000 for a 3-bed and £10000 for a 4-bed property.