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London rents forecast to increase 5.5% in 2022 as current market values breach pre-pandemic levels

London rents forecastThe latest property market analysis by London lettings and estate agent, Benham and Reeves, has revealed that rental values across the capital have not only bounced back versus the pandemic dip experienced in 2020, but have also breached pre-pandemic levels in all but three areas.

The research shows that between 2019 and the initial pandemic year of 2020, the average London rent fell by -3.4%.

The impact was far greater across many parts of the London market, with Camden seeing rental values plummet -20.7% in a year, while the City of London was also one of the hardest hit with a -12.6% reduction.

However, as London has slowly returned to business in 2021, tenant demand has also returned and current rental values now sit 9.4% higher than they did during 2020.

The pandemic continues to have an influence, with London’s more peripheral boroughs still seeing the strongest performance. Rents are up 20.1% year on year in Kingston, with Bexley (18.3%), Newham (15%), Croydon (14.1%) and Hillingdon (13.6%) also amongst the largest increases.

The City of London remains the only area yet to recover, with rental values still down -11.4% annually.

While a bounce back from pandemic decline is encouraging, the real positivity lies within the fact that the average London rent is now 5.7% higher than it was in 2019, prior to the market slowdown.

In fact, just the City of London (-22.5%), Camden (-18.9%) and Westminster (-4.6%) are yet to see rental market values return to pre-pandemic levels.

Benham and Reeves also noted that the volume of properties they are seeing let to tenants is up 67% year on year and 22.7% versus pre-pandemic levels, while landlords are now securing re-let rental prices some 10% to 20% higher than they were prior to the COVID-19 outbreak.

With a further revival now coming in the form of foreign tenant demand, the outlook is extremely positive for 2022 and Benham and Reeves believes this confidence in the market will bring a further 5.5% increase to rental values in addition to the market bounce-back already witnessed in 2021.

Director of Benham and Reeves, Marc von Grundherr, commented:

“The London rental market has arguably been the worst hit as a result of the pandemic and we’re unlikely to see a period of such unexpected uncertainty again in our lifetime. Demand for rental homes evaporate almost overnight during the pandemic causing a surplus of stock on the market while rental prices plummeted.

But the London market is nothing but resilient and when the tide starts to turn, it turns very quickly indeed. We’ve seen house prices in the capital enjoy the largest monthly bounce of all regions in a single month having trailed the rest of the nation for almost two years and the same revival is also apparent across the rental market.

Demand is lifting and rental values have not only recovered, but they’ve also exceeded levels seen prior to the pandemic. Even better still, we’re seeing further positivity in the trenches and this current market activity is yet to materialise at a top line level where market statistics are concerned.

As a result, we can say with confidence that the London rental market decline is now firmly behind us and so any lower confidence forecasts of further price reductions can now be disregarded with yet further positive growth forecast for 2022.”

Table shows current London rental market values and how they have changed when compared to the pandemic and prior to it, sorted by largest change vs pre-pandemic levels
Location Average monthly rent (2019) < Change – 2019 to 2020 > Average monthly rent (2020) < Change – 2020 to 2021 > Average monthly rent (latest 2021) Change pre-pandemic (2019) to now (2021)
Newham ÂŁ1,424 3.7% ÂŁ1,476 15.0% ÂŁ1,697 19.2%
Bexley ÂŁ1,106 0.6% ÂŁ1,113 18.3% ÂŁ1,317 19.1%
Merton ÂŁ1,530 7.1% ÂŁ1,639 9.2% ÂŁ1,790 17.0%
Ealing ÂŁ1,463 7.2% ÂŁ1,568 8.8% ÂŁ1,706 16.6%
Croydon ÂŁ1,136 1.7% ÂŁ1,155 14.1% ÂŁ1,318 16.0%
Southwark ÂŁ1,654 4.0% ÂŁ1,720 10.8% ÂŁ1,906 15.2%
Barking and Dagenham ÂŁ1,194 1.0% ÂŁ1,206 12.3% ÂŁ1,355 13.5%
Havering ÂŁ1,169 0.5% ÂŁ1,175 12.7% ÂŁ1,324 13.2%
Wandsworth ÂŁ1,883 3.5% ÂŁ1,948 9.0% ÂŁ2,124 12.8%
Lambeth ÂŁ1,754 11.8% ÂŁ1,961 0.8% ÂŁ1,976 12.6%
Haringey ÂŁ1,558 5.5% ÂŁ1,644 6.7% ÂŁ1,755 12.6%
Waltham Forest ÂŁ1,309 3.8% ÂŁ1,359 7.9% ÂŁ1,466 12.0%
Enfield ÂŁ1,310 -0.7% ÂŁ1,301 12.7% ÂŁ1,466 11.9%
Greenwich ÂŁ1,404 6.4% ÂŁ1,494 5.2% ÂŁ1,571 11.9%
Kingston upon Thames ÂŁ1,390 -7.3% ÂŁ1,288 20.1% ÂŁ1,547 11.3%
Harrow ÂŁ1,407 2.7% ÂŁ1,445 8.4% ÂŁ1,566 11.3%
Hillingdon ÂŁ1,270 -2.0% ÂŁ1,244 13.6% ÂŁ1,413 11.3%
Bromley ÂŁ1,321 -0.2% ÂŁ1,318 11.2% ÂŁ1,465 10.9%
Redbridge ÂŁ1,318 -0.5% ÂŁ1,311 10.4% ÂŁ1,448 9.8%
Lewisham ÂŁ1,324 -0.2% ÂŁ1,322 9.7% ÂŁ1,451 9.6%
Richmond upon Thames ÂŁ1,857 4.5% ÂŁ1,940 4.6% ÂŁ2,030 9.3%
Hackney ÂŁ1,834 1.4% ÂŁ1,860 6.9% ÂŁ1,989 8.5%
Sutton ÂŁ1,167 -2.9% ÂŁ1,133 11.5% ÂŁ1,263 8.2%
Hounslow ÂŁ1,432 -1.1% ÂŁ1,416 8.6% ÂŁ1,538 7.4%
Brent ÂŁ1,535 -2.7% ÂŁ1,494 8.9% ÂŁ1,627 6.0%
Tower Hamlets ÂŁ1,803 0.4% ÂŁ1,810 4.9% ÂŁ1,898 5.3%
Hammersmith and Fulham ÂŁ2,117 -4.8% ÂŁ2,016 10.2% ÂŁ2,221 4.9%
Barnet ÂŁ1,523 -2.5% ÂŁ1,485 6.9% ÂŁ1,587 4.2%
Islington ÂŁ1,914 -0.3% ÂŁ1,908 4.4% ÂŁ1,992 4.1%
Kensington and Chelsea ÂŁ3,053 -2.5% ÂŁ2,977 5.7% ÂŁ3,148 3.1%
Westminster ÂŁ3,018 -6.5% ÂŁ2,822 2.0% ÂŁ2,879 -4.6%
Camden ÂŁ2,536 -20.7% ÂŁ2,012 2.2% ÂŁ2,056 -18.9%
City of London ÂŁ2,446 -12.6% ÂŁ2,138 -11.4% ÂŁ1,895 -22.5%
LONDON ÂŁ1,697 -3.4% ÂŁ1,639 9.4% ÂŁ1,793 5.7%
Source – Benham and Reeves, the Office for National Statistics – Private Rental Market Summary, HomeLet
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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 14 international offices.

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