London home rents hit average record high of $4,380 a month as demand outstrips supply

LONDON – Average asking rents for new tenants in London shot up to a new record in the second quarter as rampant demand and

higher mortgage rates

prompted landlords to hike prices.

Tenants in the capital are now being asked to pay an average of £2,567 (S$4,380) a month – up 13.7 per cent from a year ago and by 28 per cent from the same time in 2019 before the Covid-19 pandemic.

Outside London, asking rents are also at a fresh record of £1,231 per month, up by a third from 2019 and 9.3 per cent from a year ago.

Soaring rents add to the cost-of-living pressures facing millions of households and could prove a tricky topic for both major political parties ahead of a general election expected in 2025.

It has left tenants scrambling to either pay for the swinging increases demanded by landlords or find a new place to live in a market where properties are in a short supply.

“The themes dominating the lettings market continue to be low supply and high demand,” said Ms Allison Thompson, national lettings managing director of estate agent Leaders Romans Group.

Prime Minister Rishi Sunak has been accused of worsening the shortage of properties on the market by scrapping house-building targets because of resistance from members of his own Conservative Party.

The Labour opposition has ditched its pledge to bring in rent controls.

Property portal Rightmove’s figures are significantly stronger than official data that looks at the entire stock of rented property.

That measure from the Office for National Statistics showed rents paid by private tenants in Britain increased by 5.1 per cent in the year to June – the largest increase since official records began in 2016. London rents alone jumped by 5.3 per cent. 

Rising interest rates are forcing some highly leveraged landlords to sell properties.

Rightmove said 16 per cent of properties for sale were previously on the rental market, up from 13 per cent in January 2019.

But Ms Thompson said most landlords she has worked with are mortgage-free, and there has been an increase in the number of people looking to rent. 

The supply squeeze has eased a little, Rightmove said.

Properties available to rent in the second quarter were up by 7 per cent on a year earlier, while tenant demand had risen by 3 per cent.

But on average, it takes just 17 days to find a tenant for an available property, according to Rightmove. That is the quickest since November. 

The property portal’s figures indicate the pressure that the housing market is under from a supply shortage, rising interest rates and an increase in demand for rentals.

Between 2015 and 2019, rental prices outside of London rose by just 8 per cent.

“Average asking rents for new tenants have risen at a rapid pace since the pandemic reflecting the significant increase in demand, which is driven by a combination of factors including changed housing needs such as some space to work from home,” said Mr Tim Bannister, Rightmove’s director of property science. BLOOMBERG