Knight Frank, has revealed a 39% rise in the number of prospective tenants in prime central and outer London for the first quarter of this year, compared to the five-year average. Despite this encouraging surge in demand, supply complications present a challenge, with new listings on Rightmove dropping by 34% over the same timeframe.
Tom Bill, Knight Frank’s Head of UK Residential Research, warns that these figures expose the delicate task facing the government as it tries to adjust the rules governing the rental market. “Following the recent disclosure of more details of the Renters’ Reform Bill, landlords and tenants alike have been scrutinising the specifics,” Bill shared.
The rental sector has seen an exodus of landlords in recent times, due in part to a series of financially straining tax modifications. “The repercussions of this supply-demand imbalance are trickling down to tenants,” explained Bill. “Average rents in prime central London have surged 15.4% over the year to May, with a 13% increase witnessed in prime outer London. Since the pandemic onset, average rents have surged over 25% in both these prime areas.”
The Renters’ Reform Bill, framed to bolster tenant protections, has understandably left landlords apprehensive. The bill’s proposal to eliminate no-fault evictions seemingly enhances the risk for landlords not being able to reclaim their properties. However, Beverley Kennard, Head of Lettings Operations at Knight Frank, insists the risks might be lower than anticipated.
Kennard highlighted a key change: an increase in the grounds on which landlords can reclaim their properties. “The list now encompasses issues like rent arrears and anti-social behaviour, which should instil greater confidence in landlords,” she assured.
While uncertainty lingers around tenant flexibility in paying rent upfront and the viability of shortened notice periods, Bill points out the bill is still in the early stages of formulation.
He concluded with a warning: “For landlords, it’s not as catastrophic as initially feared. However, for some, this bill might be the tipping point, exacerbating the upward trend in rents. Given that 20% of the population rents, this issue might have significant implications for the government, considering the electoral stakes involved.”
