The rush for space to work and relax at home will still dominate the rental market for the short term at least, despite the pandemic appearing to ease in most of the country.
That’s the view of Savills which has surveyed its predominantly-upmarket client tenants to discover that despite more workers back at their desks, private outdoor space (72 per cent) and space to work from home (66 per cent) continue to rank as the top two priorities for prime tenants.
These come ahead of traditional ‘must haves’ such as proximity to good transport (now important to just 53 per cent) and being close to the workplace (31 per cent).
“The easing of pandemic restrictions – including international travel and a significant uptick in corporate and student demand – over the past three months has played a major role in the recovery in the prime lettings market” comments Jessica Tomlinson, research analyst at Savills.
“But while prices are recovering , tenant attitudes and prime property preferences have permanently shifted. Many tenants may be willing to forgo proximity to their workplace and good schooling for a private garden and more space to work from home, which will continue to impact which areas of London see the highest growth in the long term.
“While it’s still early days, the outlook is positive for more central locations. We expect to see an even more sustained return to rental growth in the capital for the remainder of this year and a more significant bounce back in 2022.”
The agency says that despite the continued race for space, in prime London there is some recovery in rents for apartments; growth for rents in flats has outperformed houses in the past three months for the first time since December 2019.
Savills says that across the prime commuter belt rental markets, growth in cities is now 8.0 per cent up on the year, more than villages, towns and rural areas.
Amelia Greene, director in the prime lettings team at Savills, comments: “The return of international travel, combined with a complete easing of restrictions, has sent the prime lettings market into a frenzy. Demand is up across the board – and nearly every branch is reporting competitive bidding. Hotspots in North and East London have been particularly popular due to workers desire to walk to the office, and the return of students to the capital.
“In some instances, tenants are ensuring that they are the most appealing candidate by paying for a full year upfront, or by committing to properties site unseen. As a result, we have seen a huge pendulum swing in favour of landlords and nearly all landlords expect to see an increase in rental prices. Now is the opportune time to bring a property on to the rental market.”
Prime commuter belt rents are now up by 6.8 per cent on the year, as tenants anticipate continued hybrid working patterns.
Outer commuter locations experienced the strongest growth on the quarter – with Henley, Windsor and Cambridge coming out top.
Suburban locations and those within London’s inner commuter zone such as Tunbridge Wells and Sevenoaks continued to experience notable annual rises of over 12 and nine per cent respectively.
Amelia Greene continues: “Locations in London’s commuter belt have seen exponential price growth over the last year, as a result of strong demand from tenants heading out of the city in search of more space. Now, we are starting to see applicant numbers soften and inner London locations ramp up. However, a severe lack of stock will continue to underpin higher prices in the short-term.”