Research from London lettings and estate agent, Benham and Reeves, has revealed how tenants who secured bargain rental properties across the capital during the tenant eviction ban, are now facing considerably higher cost when renewing their tenancy – as much as £1,700 more per year in some boroughs.
The research analysed average rental values across the London rental market, looking at the decline in the average monthly rent caused by the tenant eviction ban and what the cost of renting now stands at in today’s market.
Rental market decline during tenant eviction ban
The research shows that, as a result of the tenant eviction ban, the average London rent fell by -2.1% between March 2020 and May 2021. This meant that the average London tenant was able to secure a discount to the tune of £408 per year when securing a tenancy in May of last year.
However, in some areas, this discount was far greater. Across the City of London, rents plummeted by 24.3% during the time the tenant eviction ban was in force. This meant the cost of renting was £552 per month more affordable – a saving of £6,624 per year.
Camden (-17.5%), Westminster (-15.7%) and Islington (-10.4%) also saw some of the largest declines in the average monthly cost of renting during the time that tenant evictions were banned.
Rental market revival since the end of the tenant eviction ban
Since the end of the tenant eviction ban, the average London rent has crept up by 1.2%, meaning the average tenant approaching renewal will see a marginal increase to the average cost of renting (£19).
But with normality returning to the city and our working lives, in particular, this jump in the cost of renting is far more pronounced in the City of London. The average monthly cost of renting has increased by 8.2% since the end of the tenant eviction ban, meaning that it now costs £1,704 more per year to rent in the area.
Kingston has also seen one of the largest increases at 7.1%, meaning the cost of renting is now £1,206 more expensive, with Camden (£1,230) and Richmond (£1,110) also seeing the annual cost of renting climb by over £1,000 since the end of the tenant eviction ban.
Director of Benham and Reeves, Marc von Grundherr, commented:
“London’s landlords have been hit particularly hard by the pandemic influence on the rental market, with many suffering from a prolonged period of lost rental income, either due to extended void periods, or due to tenants unable to pay their way.
The London rental market is now rebounding at an alarming rate which is great news for this beleaguered segment of buy-to-let investors and this is being driven by the return of the professional and student tenant, as well as a strong uplift in international interest.
However, despite what may seem like some drastic increases in rental values in recent months, we’re yet to see the market return to full, pre-pandemic health. This is down to the fact that rental values fell by as much as 25% in some areas of the market during the ban on tenant evictions alone. Once this was lifted, many new and existing tenants were able to secure rental properties at rock bottom rates.
Now that demand has returned, these rates are no longer on offer and so many tenants are now finding that when they come to renew, the cost of the same property is substantially higher.
But with so little stock to choose from in such a competitive space, many are biting the bullet and staying put, realising that despite this uplift, the cost of their rent is in line with actual market values.
The result of this has been some huge increases in rental value growth, albeit this ‘growth’ is simply a return towards pre-pandemic market conditions. The silver lining for the capital’s landlords is that they should now be able to recoup their losses over time.”