Rental demand rises 6.5% as economy reopens

Demand for rental properties in London has climbed 6.5% during April and May this year, compared to the three weeks prior to Easter according to Zoopla, as sectors such as hospitality and leisure reopen and bring workers back to the city.

ludlowthompson’s data also shows a 9% increase in tenancy lengths with 89%, compared to 80% of tenancies in prior months, being agreed at over two years or more.

The reopening of the leisure industry including pubs and restaurants will see an upturn both in employment and wages, and this will benefit in particular the high–yielding end of the Buy to Let market.

Figures from the Office for National Statistics show a growth of 5.6% in average total pay (from February to April 2021), while UK unemployment fell to 4.7% in the same period.

Whilst ludlowthompson’s recent research records London rents have dropped year on year by 8.7%, this overall figure is weighed down by weaker rents in the prime central London, City and Airbnb markets.

This trend should reverse however as overseas and corporate visitors, international students and City workers arrive in anticipation of an imminent return to the office in more central locations.

Airbnb properties are now being used for short-term lets again, which means stock is coming off the long-term property market. This lower supply should lead to higher rents in the long-term market, particularly as jobs return to the city centre.

Stephen Ludlow, Chairman at ludlowthompson, says: “The London lettings market is showing encouraging signs of recovery, and this is underpinned by the increase in tenant demand since Easter.”

“The opening up of pubs, restaurants and leisure facilities coupled with seasonal trends surrounding summertime and the extended day are supporting a return to London, and steadily the workplace. Wages are increasing and history suggests that as they do rents will respond.”

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