This Housing Research Note, published in June 2023, compiles and analyses a range of data on the large rent increases in London’s private rental market since 2021 and the reasons behind these trends.
Rents for new tenancies fell sharply during the first part of the pandemic period but subsequently increased very rapidly. The growth in rents between early 2021 and late 2022 put increasing pressure on private renters in London, contributing considerably to the cost of living crisis as renters attempted to adjust to higher housing costs. Asking rents for new tenancies and all-tenancy rents have shown different trends, with asking rents experiencing huge increases in recent months.
The large growth in rents in London over this period is likely to have been driven by a significant rise in demand towards the end of the pandemic (linked to the reopening of many workplaces and educational centres), and a longer-term trend of falling lettings in London’s private rental sector. Market data shows that the number of private rental properties available to rent in London has fallen substantially since mid-2020 and is significantly lower than before the pandemic.
Market data also shows demand increasing to record levels in London in late 2021 and in 2022, after dramatic falls during pandemic lockdowns. However, it is difficult to forecast what will happen to rental demand and the level of rents in the coming months, given the ongoing cost of living crisis and the uncertain economic outlook.