The House Edge, the quarterly market insight report by London House, compiles industry data from property market intelligence group, Dataloft, and direct insight from our expert sales and lettings team. Quarter 3 closed with a month unlike any other; a new prime minister, a new monarch, and shockwaves across the economy. Below we breakdown our key findings from our Q3 report for the Prime London Rental Market.
The unprecedented ructions that bookended the third quarter of the year has left the market suspended, it is also anticipated to continue to bolster the prime rental market, which is seeing average rents in prime London are 17.5% higher than a year ago, a £1,101 per week.
The 17.9%, price growth in the apartment market is outpacing growth in the market for houses, which was up just 12.3%. Unsurprisingly, such is the competition in the market that 24% of apartments and 14% of houses in Q3 2022 rented for a price more than their initial asking price.
There are however differentials in the market according to the price band of the property. Three quarters of properties which rented for up to £3,000 per week rented for the asking price or above, with 24% of properties renting for more than their initial asking price, compared to a 6% pre-pandemic average. However, the last quarter has seen a shift in higher value properties. While over 60% of properties £3,000 per week or above have let for the asking price or above (compared to 10% pre-pandemic), just 8% in the third quarter achieved an above asking price rent, down from 23% in Quarter 2.
Properties continue to rent quickly, apartments letting on average in just 45 days (marketing to start of tenancy), considerably quicker than the pre-pandemic Quarter 3 average of 79 days. Lower priced properties are renting quickest, in an average of 41 days for those priced less than £1,000 per week.
However, the time taken to rent properties priced between £1,000-£3,000 per week and £3,000-£5000 per week continues to fall, properties renting in 55 and 60 days respectively, more than twice as quickly as pre-pandemic. Rising rents and a competitive market have led more renters to negotiate and lengthen existing tenancy agreements than ever before, with the number of new tenancies agreed in Quarter 3 some 48% lower year-on-year.
Quarter 3 is traditionally the busiest time for the lettings market. LonRes report a +40% increase in apartment lets in prime London over Quarter 2, a rise on par with last year, no doubt thanks to the capital’s pull as a destination of choice in which to work and study, particularly for those from overseas.
Close to half a million students study at the 100+ higher education institutions across London, more than one in three is from overseas. The number of overseas students studying in the capital has risen by nearly 50% over the past five years, compared to a rise of just 11% from the domestic market (Dataloft, HESA, latest data available 2020/21).
Prime London Rental Market Highlights
- Rental values continue to rise steeply, 24% of properties rented for more than their initial asking price, compared to a 6% pre-pandemic average.
- Across prime London, as in the rest of the UK, the volume of new instructions to the market remains considerably lower than a year ago, with more than one in every four available properties currently under offer
- Across the market less than 40% of properties have asking prices of under £1,000 per week, compared with over half (53%) this time a year ago, while more than one in four (26.5%) are priced £2,000pw+
- The letting average in just 45 days (marketing to start of tenancy), considerably quicker than the pre-pandemic Quarter 3 average of 79 days
