The great exodus is upon us. According to the latest figures, almost two-thirds of renters have considered upping sticks and searching for a new life away from the capital. The Covid pandemic has changed the mindset for many, with house hunters looking for rural areas with plenty of space.
Since the outbreak and subsequent lockdowns, newsrooms across the country continue to run stories about Londoners looking for better value and more open space away from the capital. Covid is seemingly driving an exodus from Britain’s cities, and London is the primary culprit.
But just how many people will leave the capital, and does fewer renters potentially mean more affordable rents? There are many questions regarding Covid’s impact on the housing market, whether it’s sales or lettings. And in this guide we’re detailing what’s in store for the capital’s rental homes over the next 12 months, and whether a flock of renters will leave London.
A review of urban living
Before Covid, Londoners were already considering moving out of the capital. Citing rising rents as the primary reason, they felt a better quality of life was on offer in commuter towns like Hertfordshire’s St. Albans and Reading in Berkshire.
For many, though, living in London was a dream they weren’t willing to let go of without a fight. That was until the first lockdown, at which point the realisation that the smaller square footage found in the capital was far from ideal if you needed to stay home all day.
The exodus was on. At least it was according to Rightmove, who reported an increase of 126% for people searching for properties in village areas. City dwellers are now casting their eyes en masse in the direction of rural regions, with the primary motivator the need for more space – something many currently struggle to find in large cities.
The impact on London rents
An increase in the number of people moving out of London equates to lower demand, which has an impact on rental prices across the capital. The latest data from the HomeLet Rental Index reveals a 3.7% drop annually for rents in London, with prime postcodes seeing numbers plummet by as much as 15%.
It’s the steepest decline seen in the capital for more than a decade and will ring alarm bells with investors who are wondering if they should sell up and get out of town. Yet, those thinking of selling should heed caution: sale prices in the capital are far from favourable, with many postcodes seeing a decrease in value.
A landlord will fare better shouldering a five per cent drop-off in rental income than they will if they lose as much as 10% from the value of their asset in the sales market. In prime London, even a 10% drop could see investors losing as much as £143,000 on the sale price.
Are renters really moving away from London?
It’s clear that people are enthusiastic about moving away from the capital in the current climate, but will it be a long term trend? Research from TotalJobs reveals that 26% of Londoners are already working outside of the capital during the pandemic and plan to stay there once things normalise.
While the numbers account for both homeowners and renters, fears of subsequent lockdowns will certainly increase the desire for homes with more inside and outside space whether buying or renting. But news of a vaccine could mean that any trends are only short term.
The new normal in the rental market could just look plain old normal by next summer, as people once again cast their eyes towards London and other big cities as need-to-be-places. There are already some changes that suggest it won’t be a long-term trend.
In the early stages of lockdown, people looked for rural villages over 100 miles away from London. In the last few months, however, that mindset has changed. The focus on commuter towns has increased, which suggests that people understand they will need to return to offices at some stage.
It won’t come as a surprise if the property searches narrow even further, with those commuter belts turning into neighbourhoods in Zones 5 and 6. As more normality resumes, previous renting habits could follow suit, especially if the incentives are there for renters.
Keeping London renters happy
In the short term, portfolio owners, landlords and developers will look to maximise their investments. Keeping current tenants happy and offering incentives to new ones is something you should take into consideration at all times, especially during a pandemic.
From offering development perks to placing emphasis on technology for managing in-life tenancies, some initiatives will help keep renters in properties for longer. Demand in the private rental sector will grow in London and account for 60% of residencies by 2025, which points to the current dip being a short-term one.
Landlords who provide a comprehensive in-life tenancy experience can mitigate current upheaval in the market and safeguard their property in both the long and short term. Then, between spring and summer 2021, it looks like London will be calling for millions of renters from all over the world.