Asking rents in the heart of the leading cities in the UK saw an annual fall of up to 12% in the final quarter of 2020. This is down to an increasing number of tenants leaving city centre for the suburbs.
As you would expect, this was most notable in the English capital, with inner London seeing average asking rents fall by 12.4%. After this, the city centre of Edinburgh saw a fall of 10%, and the drop in the heart of Manchester was 5.3%.
It should also be noted that there was an increase in the number of rental properties being located in the city centre in many places. The most significant increase came in Leeds, with a rise of 179%.
A rise of rental property on offer in London
However, for us, the most notable increase came in Inner London, where there was a rise of 139% when it comes to rental property on offer.
Rightmove’s Director of Property Data Tim Bannister said: “The price premium that many tenants are usually willing to pay to have the vibrancy of a city centre on their doorstep has been tempered for now. This brings a challenge for some landlords but also an opportunity for tenants who may be able to make a longer-term decision and move into a city centre now, perhaps on a two-year tenancy agreement, at a more attractive rent than this time last year. There’s no doubt that higher rents will return once life goes back to some form of normality, but it will be the city centre properties with gardens and balconies that will be able to command the biggest premiums. Outside city centres it’s a very different picture, with agents reporting extremely busy markets and rising rents. Available stock is lower than the usual level we would see at this time of year, and demand is higher, leading to a much better outlook for those landlords in the suburbs and in smaller towns and villages.”
Demand for London living is changing
Marc von Grundherr, a known name in the London housing market, said: “With Covid continuing to pose a problem on an ongoing basis, many tenants simply aren’t committing to the high cost of renting in central London. This has been largely driven by the fact that many can now work remotely but this isn’t the only reason. Living in central London is as much about the social aspect, as it is about the convenient commute, and at present, the vast majority of the capital remains closed for business. As a result, demand has fallen dramatically causing rental stock to flood the market. This excess level of stock means that landlords are being forced to accept dramatically lower levels of rent just to avoid lengthy void periods between tenancies.
“Due to this we’ve seen a sluggish start to the year across some areas, such as our Canary Wharf branch. However, in contrast, demand remains extremely robust across London’s peripherals with tenants looking for a larger rental property with outdoor space. Our offices in Ealing, Kew, Hampstead and Beauford Park, for example, have been extremely busy. So much so we’ve had to redirect resource from our quieter locations in order to service the uplift in tenant activity in these locations.”
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