London rents are rising at a record pace as tenants who moved away during the pandemic return to the capital.
So far in 2022, nearly one third (30%) of all new tenancies in the capital have been secured by someone moving from outside of London, according to the Hamptons Lettings Index.
Over the last 12 months, rents in London have risen by 12.3%, from £1,680 to £1,886 — the fastest rate since the Hamptons Lettings Index began in 2013.
The increase is even steeper in Inner London, where rent prices jumped 22% to £2,513 — almost £500 more in just one year.
This marks a sharp rebound from 2020 when just 12% of London tenants came from outside the capital, a time when many renters left the city to move back in with parents or rent in a more affordable area.
Most (55%) of the tenants making their way back to London moved from Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent or Surrey.
This compares to a pre-COVID average of 40%. More than one in four tenants based in Wokingham, Hertsmere and Epping Forest moved into London this year.
Aneisha Beveridge, head of research at Hamptons, said: “With COVID being pushed further to the back of people’s minds, life in the capital is slowly returning to its new normal. Tenants are returning to the bright lights of the city and this is driving rental growth to record highs.
“The rise of remote working means that fewer tenants are moving to the capital specifically for work. In fact, a growing number of tenants choosing to live in London are working fully remotely and could live nearly anywhere in the country. The footloose nature of many jobs today means that it will be culture and lifestyle rather than employment that becomes the capital’s biggest draw.
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“The current pace of London rental growth is predominantly down to the capital playing catch up with the rest of the country.
"Today, the average rent in London stands 103% above the average outside the capital. While this gap is up from 96% a year ago, it remains below the 120-30% pre-COVID premium which has been eroded by strong rental growth outside the capital in recent years. But the current pace of rental growth in London is likely to push the premium closer to its pre-COVID level inside two years.”
Nationally, the cost of a newly let home rose 9.8% over the last month to £1,125, marking the fastest level of growth since the index began in 2013. This means that that just over half of all rental growth recorded during the last five years (18.2%) across Great Britain has come within the last 12 months.
Regionally, rental growth continues to be led by the South West of England where rents rose 13.9% to £1,041 over the last 12 months. This was closely followed by London at 12.3%. and then the three Northern regions at 9.4%
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Strong rental growth continues to be underpinned by the lack of homes coming onto the market. There were 30% fewer properties available to rent in April this year than April 2021, while the fall from pre-COVID levels comes in at almost two-thirds (down 61%).
The North West (down 76%), Yorkshire & Humber (down 67%) and London (down 64%) have recorded the largest falls in rental stock anywhere in the country, with few signs of more homes coming onto the market.