Rental market snapshot

The numbers are in and they confirm what the anecdotal evidence has been saying for a while. Central London has taken a pasting, but other areas have fared somewhat better.

The quarterly report from Hometrack, based on Zoopla's Rental Index, shows that the rental market has performed quite strongly in recent months, with the stand out exception of central London.

London

In the capital, rents fell by 2.5% in Q4 2020, taking the full year decline to 8.3%. Rental levels are now back to where they were in 2014. The most marked falls were borne by the central boroughs such as Westminster and Kensington where more supply has come onto the market from properties previously focused on the tourism and business travel sectors.

The outer boroughs fared better, creating a 'halo' effect. Indeed, areas to the east - metropolitan Essex - and south east, such as Bexley and Bromley, saw increased rents during 2020.

Rest of the UK

Across the UK, rental demand is still rising, up 21% in January, while new supply fell back by 11%. This is putting upward pressure on rental prices which increased by an average of 2.3% (ex London) over the year.

The only region not to show rent rises was the West Midlands which was flat at 0%. Other regions varied between 1.1% in the South East and 4.7% in the North West and North East.

The time taken to let a vacant property has fallen slightly from 15 days to a current average of 14.

The outlook

This depends greatly on the success of the vaccination programme and the kick start it gives to personal mobility. This in turn is likely to increase city centre demand, as, initially, retail and offices reopen and later, leisure, entertainment and hospitality.

When international travel resumes, many London properties will likely come out of the longer term rental market and revert to business and leisure use, reducing supply and offering some support to the centre's rental market.

The full Hometrack Rental Report can be found here