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London’s rental market ends the year strong

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According to UK property portal, Rightmove, their Rental Tracker reveals that the average advertised rent for properties in London is up to £2,627 per month. Rightmove says they receive an average of 25 leads per rental property which compares to just 8 in 2019. The ongoing lack of rental stock has been underpinning strong rents, which, according to Rightmove, have increased by 12.1% compared to last year. London asking rents have increased by 28% in the last four years the portal says, which yet again demonstrates the resilience that bricks and mortar continues to deliver as an asset class.

London’s rental market ends the year strong

September and October were our busiest months in terms of rental demand, with many international students and overseas professionals moving to the UK for the first time. We have found the shortage of good rental stock a challenge and, although those tenants are now settled in their new homes, enquiries are now more in line with the usual seasonal demand.

With high quality rental properties difficult to find during the busiest months of the year, we were averaging 30 applicants per available property, and as we now close the year, demand has typically entered a slower pace but rents across the Capital are finishing strong.

As companies called their workforces back to the office, more professionals looked for a healthy work/life balance, taking up tenancies nearer to their place of work. Across our 21 London branches this year, 78.2% of tenants we housed were working full time in the office compared with 63% last year. Properties in new-build schemes with good facilities on-site topped the table in terms of type of accommodation.

The era of very high rents continues apace

Across the year, all of our rental properties have attracted multiple applicants and have been letting almost immediately at high rents – and in many London locations, it was common for us to have 15+ enquiries for a property within the first 24 hours of instruction. In some cases, we’ve let properties before they were appearing on our website and even seen tenants waiting weeks, and in a few cases months until the type of property they wanted become vacant.

The backdrop for this and the key reasons driving this demand are the reversal of work from home with commuting by train the norm again and transport connections no more than 10 minutes away; an increase in the numbers of international students who rent private accommodation and a much higher arrival of corporate/professionals coming with their families on relocation for 2+ year leases.

This year we saw a surge in rental enquiries, exceeding our 2022 levels. These were mainly from professional individuals and couples plus small families.

Students and corporate relocations to the UK see record highs

An exceptionally high influx of foreign students needing accommodation near universities and the arrival of Hong Kongers via the BNO visa scheme looking for homes to rent swelled the numbers even further.

Our Japan Desks which operate out of the City and Hammersmith have also seen very high levels of activity from Japanese companies looking for the best apartments. They like the river views and they have the budget for them. They also like to have a parking space as a car allowance is usually included in their relocation package, so requests for parking are also at an all-time high.

Tenants renewing due to lack of choice

Tenancy renewals for the year are high averaging 79.2% across our branches. Lack of other local rental stock to choose from and affordability to buy is possibly a contributing factor.

Rents have been very good all year and homes with a waterside setting or river view have attracted the highest rents with 2 bed apartments most in demand. 1 Beds in general have also seen good demand, letting immediately.

92.4% of our rental requests this year were for fully furnished apartments. International tenants working in the UK on secondment expect furnishings to be provided along with professional property management and these factors are undoubtedly steering their choice of property and what they are prepared to pay.

London’s wide choice of employment opportunities, its global connectivity and culture will always be viewed as a destination of choice for professional renters. It has certainly been a year like no other.

Looking ahead to 2024, we would welcome the opportunity to talk to anyone who has a property becoming available for rental soon. We can help with furnishing solutions and provide you with an accurate market appraisal of what rent you can expect to get. Contact our lettings teams who would be very happy assist you.

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About the Author

Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents.  With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from 21 prominently located branches and 15 international offices.

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