Renting during coronavirus: the London postcodes where rental prices have fallen the most during lockdown
The rental market is the first part of the housing market to reflect what’s going on in the wider world.
With rents currently falling by 15 per cent in some parts of London you should move now, if you can, to make long-term savings.
The London zones where rents are falling
It should come as no surprise that rents in the capital have fallen after nine weeks of lockdown.
The housing market was on pause for seven of those weeks, with strict restrictions on home moves and viewings — eased only on May 13 — bringing it to an almost complete standstill.
Exclusive figures from Hamptons International show average agreed rents have fallen by 1.3 per cent across London compared to last year, with the biggest falls seen in Zones 1-3.
A two-bedroom, two-bathroom apartment in Chelsea. It was previously let for £725.20 per week and has been re-let at £550 per week. Through Maskells
The estate agent found that rents had dropped most in Zone 3, down 7.9 per cent year on year to an average of £1,870 per month.
In Zone 2 they were down 6.9 per cent to £2,520 a month, while Zone 1 rents dropped five per cent to £2,910.
This is partly to do with central London areas being more popular for Airbnbs and other holiday lets.
With tourism hit, formerly short-term lets are flooding on to the long-term rental market, adding to the supply, according to Aneisha Beveridge, head of research at Hamptons.
Keeping the lid on prices
So, with the market reopened and London tenants now looking to move house again, boosting demand, why are rents falling?
For a start, there’s still an imbalance between supply and demand because until restrictions eased, tenants were forced to put all but essential moves on hold, while landlords have continued to list their empty properties in the hope of avoiding a long and costly void period.
Affordability also plays a major role. With millions of renters now on the furlough scheme, many people’s incomes have already taken a 20 per cent hit, while many more are facing longer-term uncertainty around employment.
“Generally rents are determined by supply and demand but also by affordability, particularly in London where people spend a higher proportion of their income on rent,” says Beveridge.
“I don’t think we understand the hit to people’s affordability yet, so I don’t expect rents to rise again for quite a while,” she adds.
Should you move now?
Latest figures from property portal Rightmove show average asking rents are currently up 0.3 per cent on this time last year.
However, the average asking rent is lower than pre-lockdown prices at £1,993 per month, compared to £2,046.
While some landlords are dropping rents to attract viewings, others are listing at the same price they let for last year but accepting significantly lower offers.
“This is the most responsive I’ve ever known landlords be to price drops,” says Fabian Akinola of Ludlow Thompson.
The latest Royal Institution of Chartered Surveyors index predicts that rents will continue to fall across the UK in the next three months but will stabilise in 12 months.
By 2025 the industry body expects rents to be rising by about 2.5 per cent per year.
This means that if you are in a position to move now without breaking your contract, you could find a cheaper home, or even trade up to a nicer area or property.
Having outside space, a home office and nice parks nearby have become the overwhelming preoccupation of lockdown – and agents say tenants are increasingly looking for homes that offer these things.
“Perhaps because we’re in the midst of the most beautiful weather, people are talking about two things: workspace and outside space,” says Marc Schneiderman of Arlington Residential.
“With no outside space, people have realised how great a garden would be.”
Where are rents falling most?
Room rental website SpareRoom pinpointed the London postcodes where rents have fallen the most since lockdown.
Its research supports Hamptons’ findings that the biggest rent reductions are in central London, with monthly falls of 12 per cent found in SW1, where the average room rent is now £952 per month.
The W1 postcode taking in Soho, Mayfair and Marylebone, saw the second-biggest rent drop, of 11 per cent, with the average room in the area now £1,012.
Renting in SW1: Belgravia/Knightsbridge/Pimlico
“This is one of the highest-value areas in the country, bordered by Hyde Park on one side and the river on the other, with lots of high-quality real estate and Harrods on the doorstep,” says Peter Hermon-Taylor, lettings director at Maskells in Chelsea.
He estimates that the cost of that cachet has come down by as much as 15 per cent as a result of coronavirus lockdown, with the prime central London area particularly affected by a tenant base that is 85 per cent international and currently stuck abroad.
“I’ve got one tenant at the moment who was due to move into a flat in Knightsbridge last month and she can’t get a flight in from Sweden,” he says.
Hermon-Taylor notes that a few landlords have listed properties for around 15 per cent of previous letting prices.
He mentions one flat which let for £700 a week several times in the past but was listed at £550 a week and let at asking price within days.
However, he says most landlords are listing their properties at previous market prices but are very open to lower offers.
One example is a family house that was listed for £1,500 a week. It was let at a discount of £1,100 a week for four months, rising to £1,400 a week after that.
Renting in Regent’s Park NW1/St John’s Wood NW8
The leafy postcodes of NW8, encompassing St John’s Wood, and NW1, covering Primrose Hill, Regent’s Park and Camden Town, have both seen rents fall 10 per cent since the start of lockdown, with the average room rent in each area down to £820 and £848 respectively.
“We’re already seeing reductions being made in the order of 10 to 15 per cent to attract tenants,” says Marc Schneiderman of Arlington Residential.
Price drop: a three-bedroom duplex flat in St John’s Wood with porter, parking and gardens, for rent at £950 a week
“You can rent a very nice one- or two-bedroom apartment in NW8 or NW1 for anything from £350 a week to £700 a week and there are lovely flats in the Nash terraces overlooking Regent’s Park, which are less expensive than people might think at around £2,000 a week for a large property.
“You can negotiate good deals, too. Don’t forget it’s all about cash flow for landlords so the best thing prospective tenants can do is offer to pay a year’s rent in advance if they can.”
Renting in Bow, E3
SpareRoom estimates that prices in the trendy E3 postcode have dropped nine per cent due to Covid-19, with the cost of a room in a house share now averaging £646.
Fabian Akinola, head of lettings at Ludlow Thompson in Bow, says: “A void period is costly for landlords. If they break it down by how much a month’s lost rent costs versus how much a rent reduction will cost them across a year, the rent reduction is going to be cheaper. For example, £50 a month is £600 a year, which is a lot less than a month’s rent,” he explains.
He says the best deals are being made on one- and two-bedroom flats, with a new-build usually costing between £1,400 and £1,550 a month currently closer to £1,300.
How about existing tenants?
“The climate has changed and the dynamics between landlords and tenants are shifting – it’s a good time to be a tenant,” says Marc Schneiderman. “Tenants feel quite comfortable asking for rent reductions and chances are, landlords will accept them.”