The London rental market is seeing signs of returning to a more conventional state as new data from Foxtons, a leading lettings agent in London, indicates an increase in the supply of rental listings. This comes a year after the city experienced an unusually low level of rental stock.
Last summer, the number of available rental properties in the capital was at an unprecedented low. However, recent figures from Foxtons suggest a shift towards a more standard market pattern, with a notable increase in available properties as summer 2023 draws to a close.
Over the course of the year, the number of new listings has been on the rise, with a 10% increase in the supply of rental properties in September compared to the same period in 2022. As the number of available properties went up and the demand from tenants began to normalise, the competition for each new property listing has decreased. In September, there was an average of 19 renters for each new property listed in London, marking a 19% decrease year-on-year and a 17% drop compared to the previous month.
Despite the growth in the supply of rental properties, rental prices have not seen a decline. Prices in September were 10% higher than they were a year ago. Interestingly, there was no change in prices when compared to the previous month, and the rental market has seen very little price fluctuation since May 2023. The budgets of potential renters have been growing over the last few years, even though there was a 3% drop from August to September.
Data from Foxtons, based on an analysis of Zoopla, showed a month-on-month decrease in supply of 13% in September, while demand decreased by 32%, aligning with the typical end-of-summer decrease in the rental market. Westminster remained the area with the highest number of new property listings for the year, accounting for 11% of all new listings in London.
The proportion of rental budgets that renters were willing to spend on securing a property remained consistent throughout the year. In September, renters were spending an average of 99% of their budget, closely following the year’s highest spend in May, which was at 101%.
Gareth Atkins, managing director of lettings at Foxtons, said: “Supply of rental properties in London has increased 10% compared to this time last year, which is very welcome news. However we are still behind the levels we’ve seen in 2019, 2021 and of course the post-lockdown market of 2020, so we’re not back to a normal seasonal market just yet. Prices continue to be at record levels and I don’t expect that to change significantly in the short term, given we are currently still registering 18 tenants for every property we have on the market.”
Sarah Tonkinson, managing director of institutional PRS and build to rent at Foxtons, added: “As we head into Q4, budgets and prices remain high. Renters that move this time of year are often already living in London, know exactly what they want and are experienced at renting in the capital. They will be searching for good value in the properties they choose to view and ultimately rent. With higher – but not plentiful – stock levels, landlords will need to ensure they are well priced to attract renters.”
