Prime London rents massively above pre-Covid levels

Across prime London, annual rental growth in June was 8.0 per cent according to data consultancy LonRes.  

This takes rents to almost 28 per cent above their 2017-19 (pre-pandemic) average. 

The consultancy says rental demand is so strong that a significant proportion of properties are let without ever being listed which means they are not captured in the data.  Our data for June indicated an annual fall of 30 per cent in lets agreed and a 0.9 per cent fall in new instructions, with activity around half pre-pandemic levels.

While average rental growth across all property types has been high over the past two years, there are some interesting differences.  

Compared to rental values in January 2020, studio flats have seen the most growth, at 29.0 per cent. They are closely followed by houses and 3+ bed flats.  

One and two-bed flats – traditionally the most popular rental properties with tenants – have seen slower rises of around 20 per cent. 

LonRes says these findings could be a result of two separate trends.  

The first, favouring small properties, could well be due to changes in working patterns post-pandemic.  Workers who have moved out of London are now requiring a small pied-a-terre as they return to the office.  The second is more affordability-based, with tenants opting to share larger properties rather than choosing a one or two-bedroom flat.

Nick Gregori, head of research at LonRes, comments: “June saw little change in the prime London lettings market, with rents continuing to grow and new supply thin on the ground.  It’s interesting to see rental growth has been strongest for smaller properties as working patterns shift and affordability begins to bite.”

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