What's Happening Now in the Rental Market?
London's rental real estate market is in a situation never seen before.
As of November 2022, London's rental real estate market is in a situation never seen before. The number of available properties is far below the number of active applicants. As a result, competition for leases is very high, and this is having a noticeable impact on the viewing/selection process and an even greater impact on the pricing of said properties. Applicants are now placing down on offers on properties before having seen them, just to beat the competition!
During the pandemic, the market was stagnant, with a shortage of applicants; landlords offered them at heavily discounted prices. Many chose to take advantage of the extremely low prices in 2020, securing 2, 3 and even 4-year tenancies.
Despite that. the liquid real estate market saw another change thanks to political events. The market quickly reacted to the RPI and interest rate increases that began in the wake of the Ukraine war. In addition to that, the number of job vacancies in London shot up with companies hiring more and more. The record high number of vacancies reached 1 million in May 2022. Thus, demand for London lettings has been the biggest factor in why the lettings market has not been impacted the way the sales market has.
The number of rental properties on the market declined further as buyers (investors, etc.) became less willing to purchase properties for rental income and fewer properties became available for rent. The number of international students and expatriates who were unable to come to the U.K. during the lockdown and the number of tenants, including those who are considering relocating due to rent increases, have increased significantly, resulting in the current dearth of rental properties on the market.
The above factors have also led to a change in the way rental properties are viewed, with more and more viewings being conducted via video, and a situation where decisions are made (or forced) without any grace period in the selection process. We recommend that those who are looking for a rental property in London should familiarize themselves with current real estate information before conducting a property search.
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