London property rental demand ends the year on an all time high

Throughout 2022, we have seen phenomenal rental demand across London – with enquiry levels continuing to climb, even in December which is usually a little quieter.  We have simply never experienced a year like it in terms of the number of professional applicants looking for a rental property in the Capital.  In fact, we’ve seen the number of enquiries from applicants increase by 39% in 2022, compared to pre-pandemic levels in 2019.

With demand soaring and showing no signs of slowing down, we urgently need to hear from any landlord who is not already using our services to let and manage their London rental property.

We have waiting lists of fully referenced tenants in urgent need of high-quality accommodation across London so landlords may be pleasantly surprised as to the rent we can currently achieve on their behalf.

Low stock levels remain a challenge

This year, our challenge has been limited stock levels.  New developments have provided some completions across the city but this has only eased stock shortages a little and demand continues to outstrip supply by a considerable margin. Strong competition in the London rental market means that most existing tenants are choosing to renew their tenancy rather than attempt to find a new property, squeezing stock levels further.

Meanwhile the return of both overseas and domestic professionals to the Capital has continued to boost demand.  Frequently, our lettings branches have reported they have very little stock due to short turn around as properties let within an hour or two of becoming available.

London’s professionals return to their offices

The joy of working from home has well and truly faded and even hybrid working is simply a myth for most Londoners now.  Corporate tenants have been returning to the office in droves and Covid and its restrictions look to be firmly in the past.

Lack of available stock forcing applicants into short-let accommodation

The result is severe and ongoing stock shortages.  So many professionals and students moving to London are moving into temporary accommodation – either a hotel or a short-let apartment, while they wait for a rental property to become available.

Rents continue to increase

These continuing shortages of stock continue to drive up rents.  With limited supplies coming onstream, rents have been pushing up by up to 15% on average over 2021 levels, including in areas such as Kensington, Chelsea, Fulham and Hammersmith. In some area’s rents are up by as much as 25%.  This is partly due to lower rents being agreed during the Covid pandemic which are now being corrected and returning to their previous level.  But clearly the imbalance between supply and demand is having a huge impact.

The cost of living crisis

Of course, rising rents present a difficult situation for lettings agents.  We act on behalf of our landlords but we must also consider the cost of living crisis that many applicants are now facing.  We do everything possible to stress-test an incoming tenant’s ability to pay – for their protection as much as our landlord’s.  Comprehensive tenant referencing is key to ensure the tenant can afford to pay their rent throughout the tenancy and this has always been a fundamental part of our lettings service.

We strive to ensure empathy and understanding of our tenants’ situations and to consider affordability issues when negotiating new rents and rent increases.  There is a balance between the needs of the landlord and the tenant but the ultimate decision lies with the landlord.

Thankfully, many of our landlords are long-term, professional investors and are not mortgage dependent so they are often in a position to be reasonable when negotiating new tenancies.

Rental demand across the City and East London

Areas like the City and Canary Wharf are again buzzing with life.  All of our East London branches have been inundated with enquiries throughout the year.  Applicants have healthy budgets – typically £450 – £800 per week for one or two bed flats. There have been some incredibly popular developments completing this year.  In the City, Postmark London in Farringdon, One Blackfriars (SE1), One Bishopsgate Plaza (EC3) and Principal Tower (EC2) as well as One Park Drive and London City Island in Canary Wharf.  Merino Wharf and Cashmere Wharf in London Dock Wapping have also generated exceptional interest and having a branch on-site here has ensured we can be highly responsive.

Enquiries increase from tech and Fintech professionals

A noticeable trend developing this year has been the growth of tech and Fintech sectors in the City.   Professionals working in these sectors tend to have good budgets and are now a driving force in terms of rental demand in the City and East London.  These professionals have been relocating to London from around the world but we have been seeing a real surge in demand from Indian nationals in particular this year.

Enquiries grow for properties in Zones 1 and 2

Zones 1 and 2 are often favoured by corporate tenants – areas like Kensington, Knightsbridge and around Hyde Park – but low stocks have meant that rents are pushing upwards as applicants struggle to find the right type of property.  So, to secure a home, many are paying higher rents, sometimes paying rent for 6 or 12 months in advance, or perhaps making an above asking price offer.

Our Nine Elms branch has seen rental demand sky rocket this year, particularly after the opening of new tube stations at Battersea and Nine Elms.  There have been new completions at DAMAC Tower, Thames City (SW8) and Battersea Power Station itself, where a stunning new retail and entertainment complex has launched and created further interest as the area becomes a vibrant destination in its own right.

Elizabeth Line rental hotspots

2022 has seen residential areas along the length of the recently opened Elizabeth Line (Crossrail) become real rental hotspots.  We’ve seen exceptionally high and growing demand in new developments such as Dickens Yard Ealing, The Green Quarter Southall both to the West of London, as well as at Royal Arsenal Riverside in Woolwich, South East London (where we have our own lettings branch on-site).  With commute times slashed by the Elizabeth line, these areas are highly sought-after amongst London’s renters, offering faster commutes for professionals who are once again travelling into the office most days.

Demand remains high across West London

In West London, our branches at Dickens Yard Ealing, Kew Bridge in Brentford, Imperial Wharf in Fulham and Fulham Reach in Hammersmith have often been very low on stock and sometimes out of stock completely.  Japanese applicants relocating to London have been back in force this year and Dickens Yard and Fulham Reach in particular are extremely popular with Japanese corporates so demand has been exceptionally high here. In some cases, applicants have been waiting for up to eight weeks for a rental apartment to become available and we almost always have waiting lists for properties in these locations.

At Imperial Wharf and Chelsea Creek, Fulham, demand for larger homes of 3+ beds is completely unfulfilled so we have families currently waiting for stock to become available and expect to be quite busy well into the new year until we can house people.

Properties letting quickly in North London

Areas such as Hampstead, Highgate and Dartmouth Park have been seeing extraordinary rental demand too this year but again lack of stock has continued to be a problem.  Both apartments and larger family homes have been renting almost immediately throughout the year and rents continue to push upwards.  Developments including Highbury Stadium Square and Woodberry Down in North London are also very popular and tend to let immediately.

Our Beaufort Park branch in Colindale has seen soaring demand throughout the year, with almost no available properties at many times.  Many applicants have been waiting for several weeks until a property becomes available.  The area has seen increasing numbers of Hong Kongers move here under the BNO visa scheme, renting initially and then deciding to buy as they settle in to the thriving Chinese community here.  Our China Desk team, headed by Penny Cheung, has been carrying out a number of events, seminars and advice clinics throughout the year for the newly arrived Hong Kongers to help them settle in.

An influx of rental enquiries from international students returning to London

2022 has seen international students flocking back to UK universities.  In fact, the government reported that ‘In the year ending June 2022, there were 486,868 sponsored study visas granted (including dependents), 71% more than in 2019, the last full year before the pandemic’. Unsurprisingly, in some parts of London, our branches have reported that during the peak student season around 85% of applicants have been international students.   With demand so high, students have also found themselves waiting several weeks before a suitable property becomes available.

Indian students are now making up a larger proportion of international students coming to the UK.  There were 117,965 visas granted to Indian nationals in the year ending June 2022, an increase of 80,569 (+215%), compared to 2019.    In fact, Indian nationals have now passed Chinese nationals as the nationality with the highest number of sponsored study visa grants for the first time since the year ending June 2011.

Chinese nationals were the second most common nationality granted sponsored study visas in the year ending June 2022, with 115,056 visas granted, 4% lower than in 2019 (119,825).  Together, Chinese and Indian nationals comprise almost half (48%) of all sponsored study grants.

So, we’ve seen strong demand from Chinese students and increasingly from Indian students too, accurately reflecting the government’s statistics.  We have offices in both China and India so we’ve been receiving a lot of enquiries through our offices, both from students wishing to rent in London or from their parents who are planning to buy here, either for their student children, as a bolthole for themselves or purely for rental investment.  Favoured areas are those closest to top London Universities.

Contact us for an accurate rental valuation

It’s hard to predict where the rental market is heading in 2023 but with so many applicants still waiting to find a home, and no seasonal slowdown as we would usually expect at this time of year, we expect to be extremely busy in January. We urgently need more instructions to meet the phenomenal demand from professional applicants.  If you have a new property that is due to complete soon, or if you are unhappy with your current agent, please get in touch as soon as possible.

Get in touch with your local Benham & Reeves branch to arrange an accurate and up-to-date rental valuation.