Words by Sofia Lundgren
As the Head of Lettings, I get asked many questions. The most prevailing question has been, “what can we expect from the prime lettings market in 2022?”
The answer is – no one knows for sure with the pandemic still being present and the market being a bit of a roller-coaster over the past year but looking at the statistics from the last couple of months, we can get an indication on where the market is going and predict what is most likely going to happen on the market over the next couple of months.
The most recent lettings report shows that the London lettings market is starting to recover properly, and rents are up annually for the first time since the start of the pandemic. The demand for flats is over 94% higher than just one year ago and it marks the biggest jump the lettings market has ever seen. Trending now is 3- and 4-bedroom properties where we are seeing an extra high demand.
At the end of 2020, tenants were able to get away with bargains when it came to rental properties and double-digit discounts being agreed was nothing unusual in prime central London. Now, a year later with the rental stock at historical lows, the market is once again becoming a landlord’s market and the tenants no longer have the upper hand. With the highest demand in a long time, and the shortage of stock, rents are quickly rising, and tenants are facing struggles to secure new homes. LonRes reported an increase in rental prices of 19.7% higher than in November last year and 2.7% higher than before the pandemic. In other words, chances of getting away with a discounted rent in 2022 will be slim.
January tends to be a busy market with a refill of new stock but with an increase in renewals and few properties reaching the open market over the past months, there are no signs of a massive stock increase in the first months of 2022. We can only assume that the rental market will remain competitive for new prospective tenants as the numbers of new listings keeps falling. In November properties reaching the market fell with over 40% compared to November 2020. The lack of stock means that discounts achieved on asking rents during 2022 will be hard for tenants to come by and given the high demand there will be little need for landlords to reduce prices.
“November 2021 marks the first month on record, achieved rents have been higher then asking rents” LonRes reports in their Prime London Market Update for December 2021.
Rents achieved in November this year were 19.7% higher than in November 2020, with tenants now paying, on average 2.7% more than they were pre-lockdown in February 2020 and 4.0% more than they were in November 2019. So, looking ahead into the market of early 2022 with the ongoing lack of new homes on the market, means that rental increases could be here to stay and mark a new trend in the upcoming year where rents continuing to rise.