London’s rents soar, housing boom continues

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London’s rents soar, housing boom continues

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Tenants who are flocking to London are driving up rents in the capital, reversing the pandemic race for space and adding to the cost-of-living crisis in the UK.

The estate agent Hamptons said that a record 30% of the homes let in London this year went to people who previously lived outside the city. The surrounding areas of Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent and Surrey are now home to more than half of the tenants moving in.

People are tending to move to London for lifestyle reasons rather than because they are being summoned back to the office, Hamptons said. The triggers are family circumstances and changes in the family circumstances.

The capital's rents have risen by 12.3% over the past 12 months, the fastest rate since the Hamptons index began in 2013. Growth is now ahead of the national average, having lagged behind the epidemic when many people quit urban centers in search of larger homes.

The boom is underpinned by a lack of new homes coming to market, with 30% fewer properties to rent in April than a year ago.

With Covid being pushed further to the back of people's minds, life in the capital is slowly returning to normal, said Aneisha Beveridge, head of research at Hamptons. 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. The strong London rent rises because of the robust demand of tenants who were starved of the city's attractions during the long months of Covid 19 restrictions, as well as the lower supply of buy-to-let properties, with small investors leaving the rental marker after regulation changes that inflated their tax bills.

London, which saw little house-price inflation compared to the rest of the country, may remain resilient, given the relatively-higher earnings of its inhabitants, insulating it from the cost-of-living squeeze. Iwona Hovenko, real-estate and construction analyst. In a separate report, Capital Economics predicted that house prices are heading for a fall, with mortgage rates set to rise faster than in any time since the late 1980 s.

The surge in borrowing costs caused house prices to crash by 20%, according to Andrew Wishart, senior property economist at the consultancy. The drop in prices should be less dramatic this time due to tight labor market, lower loan-to-value ratios, and a lower peak in interest rates. Wishart sees a drop of 5% over the next two years, reversing a fifth of the increase since thepandemic began. He said that London and the South East can expect the largest drop in house prices, and northern regions and Wales the smallest.

A similar warning was issued last week by former Bank of England policy maker Charles Goodhart, who told lawmakers he expected house prices to decline.

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