London’s pre-eminence as a leading investment destination for property investors has enabled the capital to maintain stable returns despite volatility in the market in view of the global pandemic.
The latest rental index from HomeLet indicates that average rent in the capital now stands at £1,598 a month. This is 67 per cent higher than the rest of the UK and has demonstrated significant stability relative to the same month the previous year in May 2019.
The May 2020 data shows 2.7 per cent growth in the average rental price for a new tenancy across the UK, an absolute value of £959 per calendar month (pcm), compared to last year. If London were excluded from these figures, this average rental figure drops to £803 per calendar month. This imputes an average rental value in London that is 99 per cent greater than the rest of the UK.
Wider demographic trends show little sign of abating as the housing market continues to shift in line with consumer preferences. Pent-up demand for rental properties in the capital is enabling investors to secure larger price to earnings multiples on housing, particularly relative to alternative reduced risk investment options in the current economic environment.
The inherent stability these figures indicate is supported by data from the HomeLet’s Tenant Market Survey in which 68 per cent of the 20,388 tenants surveyed expected to be renting for a year or longer, and 24.1 per cent didn’t know how long they might be renting for.
With the UK property market demonstrating resilience during uncertain times, a flight of investor capital towards quality housing assets recognised for long term stability is a trend that is likely to endure.
When London is excluded the average rent in the UK was £803 in May 2020, average rents in London (£1,598) were 99% higher than the rest of the UK