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Rents under pressure across UK and in London in particular

New data from Zoopla shows that a two-speed rental market is operating across the UK, with London in particular hitting major problems.

It says rents in the capital have fallen three per cent since the start of the year and are down by 1.4 per cent when measured over the last 12 months.

This is the second time rents have fallen into negative territory in the last three years in the capital - rents fell in March 2017 on the back of rising supply after the introduction of the additional homes stamp duty surcharge the previous year. 


Inner London has seen the greatest downward pressure on rents as the working-from-home policy and reduced international travel and tourism impact the pool of demand for rented property.

Meanwhile availability of rental stock in London has increased significantly, mainly thanks to the near-collapse of the short lets market.

Zoopla’s latest market snapshot shows other problems, too.

In Edinburgh, where annual rental growth has slowed to just 0.2 per cent - down from four per cent a year ago - the rise in supply has also been exacerbated from the movement into the mainstream rental market by landlords who had been operating their properties as short lets.

The uncertain outlook for international tourism, as well as new legislation that may  limit the types of homes that can be used for short lets in the Scottish capital, is likely to have created a one-off shift in properties to mainstream rental.

Meanwhile across the UK as a whole, the portal says average rents dipped by 0.3 per cent in June and by 0.8 per cent in the full second quarter. 

Zoopla predicts that annual rental growth in the UK outside London will slow from its current 2.2 per cent to just around 1.0 per cent by the end of the year, with an annual decline in London of as much as five per cent by the end of 2020.

Gráinne Gilmore, the portal company’s head of research, says: “The future path of annual rental growth will be determined largely by the economic outlook, especially the rise in unemployment and the future path of average earnings. 

“However, as new rental supply continues to catch up with demand levels, we could see further softening of headline rental growth by the end of the year, although there will be some areas of outperformance.

“Uncertainty continues over how any further outbreaks of COVID will impact the resumption of office life, student life and tourism, and this uncertainty will impact demand in some markets during the rest of the year.”

  • Mark Wilson

    From my experience the data understates the decline and agents for some reason are still talking up a falling market. This is terrible advice to customers and is shabby conduct.

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    • 05 August 2020 17:04 PM

    Many LL converted to fraudulent short-term lettings to beat rising costs which was making long-term lettings unviable.

    Particularly S24 LL.
    They are now being forced to return to unviable long-term lettings.

    Many will determine it is no longer worthwhile and sell up.

    Short-term letting unless perhaps FHL is a bankrupt business model.

    The demand simply isn't there and it will be doubtful it ever returns.

    The existing normal hospitality should cope with that limited demand.

    There is no doubt that currently there are simply too many properties available for long-term letting.

    I see many properties to let still available at LA.

    They AREN'T being snapped up.

    Letting supply needs to be substantially reduced before rents can increase again.

    Mind you with the Staycation market going great guns it might be possible to convert to FHL.

    But I reckon all the best FHL places have been bought and any being sold will go for top market prices.

    I can see demand for Staycations being massive.
    If people can't travel by air they will want somewhere in the UK.

    There simply isn't the supply of FHL for all those who would previously have gone abroad.

    LL able to convert to FHL should make a pretty penny.
    Even better S24 DOESN'T apply and there is business rates relief
    FHL you expected a few months of voids.
    Not anymore!!


    "I see many properties to let still available at LA.
    They AREN'T being snapped up. "

    That may be true for your area, but not for mine. Paul. Properties are being re-let quickly and at increased rents.

  • girish mehta

    Many landlords will exit the market on short term due to changes in economy.
    People won’t be able to commit
    As job security won’t be there and the deposit needed will be substantial.
    They will prefer to stay on rental accommodations

    Long term landlords should get reasonable returns but expect Government to tax them heavily. As returns from other investments will be more risky

    Long term term the market will be for professionally managed as tenants demand and returns will need to be managed more efficiently


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