Rents in London have dropped by between 10 and 15 per cent as fewer people are willing or able to move to the capital in the light of the Coronavirus crisis and its fallout.
The warning comes from London-focussed agency Chestertons, which says that as a result increasing numbers of landlords are left holding empty, or soon-to-empty, properties.
Before March, the agency had been seeing gradual price increases as strong demand from tenants and a limited supply of new rental properties coming onto the market pushed prices up.
However, this trend has seen a sharp reversal since lockdown started in mid-March and prices are now around as much as 15 per cent lower.
The lower levels of demand are due to several reasons:
- The student market – including the lucrative overseas student market – has dried up as students no longer know if they will be able to study in September;
- Corporate relocations are very low, as most companies continue to ask their staff to work from home and international relocations are put on hold;
- Existing tenants on furlough or worried about their future income are delaying committing to new leases as they consider cheaper accommodation options, including moving back with family;
- Other tenants are renegotiating lower rents with their landlords to avoid the hassle, costs and risks associated with moving.
Richard Davies, Chestertons’ head of lettings, comments: “We are now coming into the busiest time of year for rentals in London when rents usually are at their highest. However, we have seen a rapid switch from a landlords market to a tenants market and landlords are now having to discount their properties by 10 to 15 per cent in order to secure a tenant, or risk facing a long void period with no rental income.”