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Rents in London have fallen during the Coronavirus pandemic, property portal Zoopla has reported. However, London is the exception and rents risen in a buoyant rental market across the UK as a whole, it said.
‘Average rents in London have fallen by 5.2 per cent over the last 12 months, reaching levels last seen in 2014’, Zoopla found. It puts this down to ‘new working patterns and lack of tourism during pandemic’.
In contrast, rents increased outside London by 1.7 per cent and rental has increased by a fifth over last year – strong demand that is being driven by a squeeze on lending to potential first-time buyers, said Zoopla.
‘At the same time, supply remains constrained with levels of investment in buy to let still reduced following the changes to Stamp Duty (the additional 3 per cent surcharge on second properties) and the wider tax regime introduced from 2016 onwards’.
Renters are showing increasing interest in larger properties, especially those that may have access to outside space.
‘The search for space, first seen in the sales market, is now being firmly replicated by renters. Zoopla’s top searches for rental properties include the terms gardens, parking, garages, balconies and pets, reflecting a need for outdoor space and freedom necessary to cope with lockdown. There is also evidence that while the market as a whole is moving more quickly, the market for rented houses is moving more quickly than that for rented flats, reflecting this desire for more space among renters’.
‘For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth’, said Zoopla head of research Gráinne Gilmore.
‘The split in the rental market caused by COVID-19 has now crystallised and we are seeing the two-speed market firmly entrenched.
‘We haven’t seen the exodus of students from cities and, as more people are staying in the rental market given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents. At the same time however, muted earnings growth will start to limit the headroom for rental growth in some markets.
‘The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown’