London rental market facts and figures

The London rental market is showing strong signs of returning to its pre-pandemic state. According to a recent report (by Foxtons), applicant demand decreased 24 percent from month to month. This is in line with the typical seasonal decline observed in the lettings market. The broader picture reveals more details. Overall demand throughout 2023 showed a 12 percent decline compared to 2022. A significant downturn began in July, indicating a return to more standard market activity levels.

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The report further suggests that there has been a 22 percent year-on-year decrease in new renters per new instruction. It indicates a shift towards a more balanced lettings market. This shift is characterised by an increase in available rental properties and stable demand levels.

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It is important to note that while the number of renters per new instruction has decreased across London, certain areas, such as South London, still exhibit relatively high figures, with on average 24 renters bidding for each property. It is a similar story in West and East London, which maintain robust demand levels, with 23 and 22 renters per instruction, respectively.

Statistics: London rental stock levels

The report states that positive momentum gained by the rental market can be largely attributed to the increase in available properties, particularly in the latter portion of 2023. September and October showed a major increase in stock to let, with stocks soaring by 29 and 37 percent, respectively, compared to the previous year. Even December 2023 witnessed a notable 22 percent improvement in inventory compared to December 2022.

The overall availability of rental properties improved throughout 2023 and surpassed that of 2022 by 13 percent. This trend of increasing supply is expected to remain steady in the initial months of 2024, providing much-needed stability and opportunities within the market.

Experts believe that the London Lettings market will revert to a more balanced state in 2024 compared to the period since 2020. They anticipate a volume increase during the spring and summer months, followed by a stabilisation in the fourth quarter. This trend is expected to give renters and landlords greater assurance despite the approaching General Election. As of January 2024, the London lettings market has demonstrated a remarkably improved balance compared to recent years. This marks a promising beginning to what is expected to be a crucial year for the industry.

London: Pre and post-pandemic rental stock levels

A report by LonRes details a deceleration in the pace of annual rental growth across prime London, reaching a 29-month low. Annual rental growth in this segment now stands at 3.5 percent, although rents remain significantly higher, by 29 percent, compared to the pre-pandemic average of 2017-2019. Throughout prime London, new letting instructions experienced a modest increase of 2.8 percent in December compared to the previous year, while agreed lets declined by 11.7 percent over the same period. It is worthy of note that compared to the end of 2019, the currently available stock is more than 30 percent lower.

Outlook for London’s Rental Market in 2024

The London rental market appears to be moving towards a more stable and balanced environment as we head into 2024. With an increase in available rental properties, a modest slowdown in rental demand, and a gradual return to pre-pandemic conditions, both renters and landlords are likely to see greater stability in the coming months. While certain areas continue to exhibit high demand, the overall supply is improving, creating a healthier market for all. As the market continues to adjust, it is expected that 2024 will offer more opportunities for both tenants and landlords, providing a promising outlook for the year ahead.