Prime London Lettings Report: June 2021
Prime central London lettings index: 138.8Prime outer London lettings index: 149.5
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Demand continues to build in prime lettings markets in London and the Home Counties as lockdown restrictions are relaxed and the next academic year approaches.
Underlining the strength of demand, two separate records were broken in June, Knight Frank data shows.
The number of new prospective tenants registering reached the highest level on record, as did the number of viewings.
Compared to 2019, which was an active year in the lettings market, the number of viewings was 82% higher in the month of June. The number of new prospective tenants was 97% higher.
Although UK lockdown restrictions have not yet been fully relaxed, the figures underline the extent to which demand has built during successive national lockdowns.
“The prime lettings market in London and the Home Counties is on the verge of a notable escalation in activity,” said Tom Bill, head of UK residential research at Knight Frank. “Demand is getting stronger as supply normalises, which means upwards pressure on rental values. And that is before the relaxation of international travel restrictions.”
The combination of relaxed restrictions and seasonality could produce a bottleneck during August and September as demand from corporate tenants and students picks up.
The weekly number of enquiries from corporate relocation agents reached its highest level since September at the end of June in a sign of how activity is rising. The lettings market is already feeling the effect of workers planning for their return to the office, a trend which we analysed here.
Meanwhile, the number of students looking for lettings properties is rising, although uncertainty over the extent to which Universities will teach face-to-face, as well as travel restrictions, means demand is on hold in many cases.
Addressing the issue of a potential bottleneck later this year, UK immigration minister Kevin Foster last week confirmed that visa concession rules would be extended to April 2022, meaning international students can begin studying remotely and still qualify for work rights on graduating.
“We are keen to avoid this way a surge of travel in late September and early October,” he said.
Rental value declines continued to narrow in June, as demand increased compared to supply, as the below chart shows.
In prime central London, the average decline in the three months to June was 1.6%, the smallest drop since the start of the pandemic.
The annual rental value change in PCL was -11.5%, the narrowest decline in six months.
Prime outer London also recorded its smallest quarterly decline (-0.8%) since before the pandemic, with rents falling 8.1% in the year to June.