Declining stock levels, high demand and increased renewals are driving up figures in London’s rental market according to property data firm, LonRes.*
The number of available lets has dwindled down to almost half the levels recorded last year at a 43.8% decline. This has resulted in rapid rises in rent, which have increased by 24% over the last year.
The data also revealed which types of property are growing in demand and price, as stock shortages see renters more willing to pay a premium on certain types of properties to get ahead of competition.
Studio flats
Studio flats have seen the fastest rent rises over the past year at 26%. These are a popular option among single tenants, especially as house prices are rising at an unaffordable rate for those hoping to live alone. Young people are renting for much longer periods than ever before, as the need for personal space outweighs the need to stay with family and save for a mortgage. Particularly for those living in London for work, studio flats offer the right amount of space without having to pay for any excesses such as spare rooms.
Three-plus bedrooms
Larger units offering three or more bedrooms recorded the largest rent rises since 2019 at 23.2%. With the cost-of-living crisis and rising inflation taking their toll, more growing families are choosing to rent for the time being while saving up for a mortgage takes a backseat. A lack of supply on the housing market may also be a contributing factor, as families could be waiting for more options to open up in desirable locations.
Additionally, with rent and energy prices on the up, many renters will find it ideal to share with several roommates to spread out the monthly costs, rather than renting alone.
London rents on the rise
Confirming the upwards trends for London rents, the latest data from the Office of National Statistics (ONS) was released in August. The figures outlined that London rents rose the most in five years as demand for rentals continued to exceed the supply of properties. Private rental prices in London saw a 2.1% growth in the year to July and are set to continue on the same upwards trend going in to 2023.
Long-term tenants staying put
With inflation rates growing and housing supply being outstripped by demand across the board, renters now more than ever will take comfort in renewing their lease. A long-term tenant can reap the benefits of having their rent raised little-by-little rather than a lump sum all at once, making the rising prices more digestible. As London is a desirable location in itself, having already secured a rental home can feel like a triumph for many renters, and moving on simply isn’t worth the hassle of dealing with competition.
Higher paying tenants
To get ahead of other applicants and secure a property in a specific location, tenants are offering to pay landlords more rent than they are asking for, particularly if the home offers features on their radar. Tenants are also far more agreeable to rent increases if it means they can remain in the property and avoid finding a new home while the market is so congested by other renters.
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