Frustrated sellers decide to rent out in London

Data shows that a significant proportion of the new rental properties coming to London’s rental market had previously been put up for sale – suggesting that sellers are reacting to the slowing sales market by switching to the rental sector instead.

The findings come from Chestertons who say that these ‘frustrated sellers’ are adding rental homes that are desperately needed in the capital’s PRS.

Also, the real estate firm says that the long-term tenancies that many tenants negotiated during Covid are now coming back into circulation.

‘Landlords having to rethink the level of rent’

Richard Davies, Chestertons’ COO, said: “More rental properties have come back onto the market which is resulting in tenants having more choice and some landlords having to rethink the level of rent they can ask.

“We expect these stabilising trends to carry on well into 2023, meaning that rental price growth should slow to around 5% by the end of 2023.”

Still rebalancing after the Covid lockdown

Chestertons’ latest analysis of the London rental market compares December 2022 with December 2021 and found that the sector is still rebalancing after the Covid lockdown:

• There were more than 50% rental properties available vs December 2021
• There were 17% new rental properties that came to the market compared to December 2021
• There were 12% fewer tenants looking to move compared to the previous year
• The number of tenants choosing to renew their tenancies plateaued for the first time in many months.

80% increase in reductions of asking rent

Chestertons’ December data also reveals an 80% increase in reductions of asking rent compared to December 2021.

Sebastian Verity, the firm’s head of research, said: “Although this appears to be a colossal jump in price reductions this is a mere normalisation to pre-pandemic levels.

“We need to bear in mind that 2021’s lettings market experienced unprecedented conditions whereby Covid lockdowns caused disruption to the normal ebb-and-flow of tenants and properties.”

He added: “By the end of 2021, an unusually large number of properties were ‘tied up’ in existing tenancies, which pushed rental prices to record levels and significantly reduced the number of price reductions we’d usually expect for December.”