UK rental market update Q3 2022

Central London rental market is currently booming

The return of international students, young professionals, and corporate relocations has fuelled demand for rental properties in London in the last few months resulting in increase in rents.

Rents across the UK grew 12% in the 12 months to June 2022, according to Zoopla. Furthermore, rental values in prime areas of London are 9% higher than before the pandemic (Knight Frank May 2022).

Savills states that “This growth has now more than compensated for the falls seen across much of the capital during the pandemic”.

Lack of available properties to rent is pushing up the UK rental property prices

The effects have lack of rental properties and a surge in demand have significantly reduced the time to let a vacant property in the second quarter of this year. The average time to let a vacant property has dropped to 11.3 days, the lowest since March 2014.

At the same time, the lack of rental stock has contributed to this rental price increase situation. According to Rightmove data, the number of UK properties listed to rent in the year to June 2022 is 26% lower year on year. This notable decrease can partly be explained through tax changes between 2019 and 2022, where many private landlords sold their properties and a vast majority of them did not return to private rented market.

Regulatory changes have also prompted more landlords to leave the lettings market this year. The Renters Reform Bill, due to be enacted by the end of the year, will end no-fault evictions, and would require landlords to meet a new ‘decent homes standard’.

The market is bracing for another pressure just before the start of the new academic year 2022 as there is a high volume of high-net-worth foreign students applying for private accommodation in the UK. Over 310.000 full time students have been registered in London universities, and there are more than 8.7% undergraduate applications than this time last year – says Savills in its special Student Housing London report of August 2022.

With the lack of available rentals, tenants are staying longer, so the average length of tenancies is now exceeding 24 months.