Recent research from the National Residential Landlords Association (NRLA) has suggested that tenant demand for rental properties in England and Wales is the highest it's been for five years.
The research, which was carried out in partnership with a professional consultancy, found that 39 per cent of the private landlords they surveyed had seen increased rental demand in the second quarter of 2021 – representing a rise of eight per cent on the earlier part of the year. Across England and Wales as a whole, things haven't looked this rosy since the first quarter of 2016, but dig a little deeper and a more nuanced situation emerges.
Are things the same everywhere?
In fact, when you drill down into the figures, it appears the rental boom is heavily regionalised.
In the South West, South East, Wales and Yorkshire, over 60 per cent of landlords reported increased demand. Optimism about the future was generally higher in these areas too, and less than half of landlords in Yorkshire and the Humber felt that their property rental businesses would continue to be negatively affected by the pandemic going forward.
But the survey responses from London paint a very different picture. Only 15 per cent of landlords in the capital reported increased demand for rental properties, while 53 per cent said that demand had fallen. And when it came to the future, London landlords remained more cautious than those in other areas, with eight out of ten saying that they expected the coronavirus pandemic would continue to have a negative impact on their business.
Why is it a different story in London?
While many areas of the UK have experienced a boom in both sales and lettings since the first lockdown ended late last spring, property in London has lagged behind.
Partly this is because of the so-called ‘race for space’. Living in London has always been a bit of a trade-off, with proximity to the workplaces and attractions of the capital set against smaller homes and higher rents. With more people now working from home – and London’s cultural and hospitality venues closed for long periods over the past 18 months due to lockdowns – a lot of city-dwellers have decided to move to more spacious properties in the suburbs or the country.
Might these trends continue?
It seems likely that demand for rentals will remain high as the UK economy continues to recover post-Covid. Employment figures have bounced back robustly, and in fact some sectors are even encountering a labour shortage that is driving up wages.
And of course there’s the property sales boom to consider. Soaring house prices and a limited supply of places for sale mean that it’s harder than ever for first-time buyers to get on the property ladder, and many aspiring homeowners could end up staying longer in rented accommodation before they’re able to buy.
A report back in June also found that for the first time in five years renting is now cheaper than buying, and the prospect of more disposable income may also increase people’s interest in the rental market.
As for whether London will continue to see lower demand than other areas, the jury’s still out. To some extent, it’ll depend on whether our working practices creep back towards an office-based model, or whether remote working is here to stay. Likewise, as the cultural and hospitality sectors recover, London is once again becoming an appealing place to live, and the draw of the city’s attractions may yet tempt people back from their suburban gardens.