The research reveals that 65% of London neighbourhoods have seen rental growth set back by at least five years, with the biggest drop recorded in Finsbury, where asking rents are 24% down on five years ago from £2,818 per calendar month (pcm) to £2,147. The number of rental properties in Finsbury on Rightmove is up by 76% compared to a year ago.
The biggest five-year rise in London is in Hammersmith where asking rents are 12% higher than five years ago, although the rental growth occurred between 2016 and 2020 as rents are down by 19% in the area compared to this time last year.
The figures spell some good news for people looking to rent a new property in London, as there may now be more areas open to them that before were completely unaffordable. The biggest decline in cash terms is in Knightsbridge where monthly rents are £1,246 lower than five years ago although they are still a hefty £6,221 pcm.
Outside London, there are only seven locations in the study with asking rents lower than five years ago, three in Surrey (Woking, Walton-on-Thames and Weybridge), two city centres of Southampton and Birmingham, along with Leamington Spa and Chigwell.
The rental market is seeing record demand and a lack of available stock across all regions outside the capital, leading to strong rental growth across all regions and monthly asking rents at a record of £982 pcm. East Midlands has seen the biggest increase over the past five years of 19.3%, rising from £733 to £875 per calendar month. It has also seen the largest growth over the past year, up by 7.5%.
The strong demand has led to the percentage of available rental stock outside the capital being down by 54% compared to this time in 2019, while in London it is up by 19%. This has led to the majority of regions seeing properties let to a tenant in the fastest time since we started recording this data ten years ago. South West is the fastest at 14 days, followed by the East Midlands at 17 days.
Tim Bannister, Rightmove’s Director of Property Data, said: “Our data shows a stark contrast between the rental market in central areas of London and the market across the rest of Great Britain.
"Agents are telling me that they don’t have enough rental stock to meet the demand from tenants in many areas, while in London there will be some tenants who have a lot more stock to choose from. Landlords who five years ago took a longer-term view obviously couldn’t foresee the effect that covid would have on rents, and right now they’ll be doing all they can to prevent voids and hope the drop in rents is fleeting.
"The frenzied buying and selling market is likely to be exacerbating the problem as well, as some sellers are moving into rental accommodation until they find the home they want to buy, adding further demand to already diminishing rental stock levels.”
Richard Davies, Head of Lettings at Chestertons, adds: “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. As a result, prices are the lowest we have seen for several years and represent incredibly good value for those tenants thinking beyond lockdown and looking to lock into a good deal. As the country starts to open again, we expect growing numbers of tenants to return to the more central areas and anticipate that rents will quickly start to recover.”
