Britain's rental market is hottest outside London
The pandemic has made the capital more affordable for tenants, and other cities less so
That London's rental market runs in a different gear to the rest of
the country's is news to no one. Rifle through estate agents' offerings for Mayfair,
a plutocrats' playground in the West End, and you are spoilt for a choice of one-bed
flats that can be rented for upwards of 10,000 ($13,450) a month.
Come down from the stratosphere and rents are still eye-watering.
In 2020 the median London household renting its home from a private landlord spent
38% of gross income, according to the Office for National Statistics.
In England as a whole, the comparable figure was 23%.
Recently, the rest of Britain has been catching up.
A report by Zoopla, a property website, found that rates for London rentals agreed to
in September were higher than a year previously. That broke a 15-month-long trend
that has left them 5% below their pre-pandemic level.
Meanwhile rents outside the m25 not only kept growing,
but started to do so at the fastest rate since the financial crisis (see chart).
Even as the capital became marginally more affordable, everywhere else became less so.
Part of the divergence was caused by falling demand for housing in urban areas,
as locked-down workers in search of space and gardens decamped to the countryside.
Purbeck, Dorset, became Britain's hottest district, with rents soaring by more than
16% in the year to September. But cities other than London got a boost as well.
From Birmingham and Bristol to Leeds and Liverpool,
taking the whole pandemic in the round, rents went up.
In the face of successive shutdowns, explains Grainne Gilmore of Zoopla,
most cities seemed to breathe out. Demand for rentals in their inner zones
hollowed out as those able to move easily headed to the suburbs.
Now the reverse is happening, with demand in many city centres
during the third quarter of this year running at more than double the
level of the first quarter. But despite tenants' shifting preferences about locality,
in most cities overall demand remained above a supply of rental properties
that has been subdued by lower buy-to-let investment. As a result, rents mostly went up.
London appears to have breathed in again more shallowly.
A survey published by the National Residential Landlords Association on November 26th
found that demand for rentals in the capital rose significantly
in the third quarter of 2021. But it rose by more in the south-west, south-east,
Wales and West Midlands. Mobility data from Google suggest that visits to
both workplaces and recreational venues such as bars,
restaurants and shopping centres in London remain further from their pre-pandemic
levels than in Manchester, Birmingham, Leeds and Liverpool.
At the same time, properties listed on London's rental market now
take longer to be snapped up than in the rest of Britain.
That is another reversal of the pre-2020 state of affairs.
Successive governments have stressed the need to rebalance the country away from
its capital but failed to do so.
A pandemic seems to have shifted things in that direction.