Inner London rents rise for first time since the pandemic

For the first time since January 2020, rents in Inner London last month were higher than they were a year before.

November rents in the centre of the capital rose 3.9% compared to the same month last year, climbing to an average of £2329 per calendar month.

The returning of workers into the office, alongside global travel, are the key reasons for the growth according to the Hamptons Letting Index.

Rents in Inner London have been hardest hit as the rise of flexible working has seen fewer new tenants move into the capital, Hamptons said.

Rental prices in the Big Smoke hit a low point coming in April 2021, when they were down 22.1% annually, having been on a decline since January 2020.

It still costs less to rent a home in Inner London than it did on the eve of the pandemic, with Hamptons estimating that the pandemic has cost Inner London landlords £2.9bn in lost rent over the last 22 months.

In cash terms, the average property in Inner London cost £530 less to rent than it did during the peak. 

The market was boosted in November by a 14% increase in people looking to rent in London’s innermost 13 boroughs.

Hamptons said there were 71% fewer homes to rent compared to the same time last year.

Hamptons does expect London rates to grow over the next year.

However, the current rate of growth is considerably behind the nationwide average, which is 16.1%, with the Southwest region experiencing the largest increase of 23.5%, or £190 pcm.

“The desire for space has been the property trend of the pandemic,” said Hamptons head of research Aneisha Beveridge.

“While smaller city properties have fallen out of fashion, larger family homes have been in high demand. 

“But with rents on larger homes currently rising at twice the rate of smaller properties, it is now more costly for tenants to trade up than ever before.”

She said the pandemic was the first time there has been such a big divergence in rental growth by property size. 

“As more tenants make their return to city centres, many seeking smaller properties, it’s likely that the gap will begin to shrink in the new year.”

She said there were some signs that rental growth is slowing.

“If growth continues at current rates, we are likely to see rents outside the capital hit £1,000 per month by the middle of next year.”