Eager to get ahead of a potential bubble burst, the past few months have seen increasing numbers of London landlords selling their properties, leading to extremely low stock in the rental market. In London, where the rental market is already incredibly tight, the problem is especially acute.
In December, the monthly supply of rental properties in London fell to just 66,000, half the level it had been at in the summer. Over the past six months, the number of properties listed for rent hasn’t surpassed 80,000.
Throughout May there were around 74,000 properties listed for rent across London, a small increase from April, but 42% below the level in May 2021.
Across the city, Hackney, Islington and Camden have the biggest fall in rental stock compared with a year ago, though all have seen some recovery in the past month.
Meanwhile in outer London, including Barking and Dagenham, Redbridge, Harrow, Hillingdon and Brent, rental stock continues to fall month on month.
A significant part of this fall in supply is London landlords selling up. Monthly surveys by Propertymark, an association of over 17,000 letting agents nationally, found that in February, each London agent had on average 1.5 landlords who were withdrawing their properties to sell them.
In March, this increased to three per agent, and stayed steady during April.
Data provided to City Monitor by Zoopla shows a similar trend across the UK: in the first quarter of 2020, 3.79% of properties listed for sale had been previously listed for rent. In the first quarter of 2021 that has risen to 5.25%, last quarter it was up to 8.36%.
“Many landlords have simply had enough and are becoming better incentivised by rising property prices in the sales market and are selling up,” says Nathan Emerson, CEO of Propertymark. “Member agents are telling us that many of these properties are not making it back onto the rental market.”
Even as rental supply shrinks, demand is staying high - with Propertymark’s data showing an average of 95 new applicants per letting agent branch in April, up from 78 per branch in February.
This means that rental prices continue to rise. HomeLet’s Rental Index showed that average London rents in April reached £1,804 a month, up 1.9% compared with the previous month and 14.2% higher than a year before – the highest regional growth in the UK.
“In April the number of people registering at member branches to find somewhere to rent outnumbered properties available by 19 to one,” says Emerson. “This shortage is creating competition which is driving up rents at a time when the country is gripped by a cost-of-living crisis.”