London residential rental growth spills over into the commuter belt

Created: 09 Aug 2022

Residential rental growth in the UK capital has eclipsed levels seen over the last two decades, as a result of a confluence of constricted supply, significant tenant demand, as well as a number of economic drivers plus legislative changes affecting market dynamics. This rental surge is spilling over into the commuter belt, which continues to hold appeal with expedient infrastructural access to London and outdoor or office space still high priorities.

Prime London rental values ballooned 13.5 per cent annually through to June 2022, the greatest rise since 1998, with the capital more than making up for falls experienced during the course of the pandemic. This monumental recovery is evenly distributed across flats and houses with Savills data showing annualised rents up 14.9 per cent for the former and 11.7 per cent for the latter.

This marks a first return to pre-pandemic levels for the London flat market, buoyed by corporate relocations and influx of international students. Moreover, this is driving growth in commuter towns that offer connectivity and commutability with rents for commuter towns up 8.9 per cent relative to village and rural locations, up by a more modest 5.4 per cent. Prime rents in the commuter belt are up 15.3 per cent since March 2020, according to Savills.

Room rents reached over £1,868 per month on average, according to HomeLet, with the most recent data taken from tenancies that have just been agreed. Looking ahead, supply levels look set to tighten, with 18 per cent of landlords in a HomeLet survey expecting to leave the sector or reduce real estate holdings in the near future – up to 22 per cent in London.

Families and ‘those who were not able to buy’ were ranked as the top two demand drivers groups opting for commuter belt leases in the last quarter by Saviills’ analysts and agents. These have overtaken ‘try before you buy’ as a cache which has reduced in stature relative to these imperatives.

“Outside of London, the average rental property is now listed for £1,126 a month. That’s 12% higher than this time last year, and 19% higher than before the pandemic. Inside London, the average rental property is listed for £2,257, which is up 15.8% on this time last year.”

https://www.refinery29.com/en-gb/uk-average-rent-july-2022

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