Signs of recovery in London’s rental market

We are feeling the impact of the Covid-19 pandemic in every sphere of life and it is certainly being felt by the lettings market. Landlords are rightly worried about tenants’ ability to pay rent and rental costs are a concern to all. Before we look at the signs of recovery, it’s worth acknowledging what impact covid has had on the market.

Covid compared to disasters

It may sound extreme to compare the Covid-19 pandemic to a disaster such as an earthquake, however there are some commonalities. A so-called act of god such as a hurricane, is instantaneous and overnight. It is therefore obvious to call something like this a disaster whereas the pandemic has been rolling out over a longer period of time but in many ways can still be viewed as disastrous. The combined impact of isolation, lockdown and a general diminished desire to view property whilst infection rates were rising, have all culminated in hitting the rental market. When demand drops we tend to see falling prices as well as reduced portfolios where landlords decide to withhold listing the property.

Economic impact

The economic impact of the pandemic has been fairly obvious. With many people furloughed or having to take salary sacrifice, disposable income has been in short supply. When the majority of society is experiencing this, it’s fairly evident that the rental market will slow. Investors have been concerned that reduced demand will push up prices and this in turn will make it difficult for potential tenants to afford the rent. Given the financial implications we have already discussed, this seems like a legitimate concern but can’t be seen in isolation.

Landlord concerns

Many of us have either experienced a change such as working from home or furlough or it may be that the very nature of our job and how we execute it has altered. Potential landlords thinking of investing in rental properties therefore have a legitimate concern about tenancies. Even if the tenant is in employment, is that company stable? Are they likely to experience changes that could impact their ability to pay the rent? After all those who go into investing in rental properties, want them to make an income. If they can’t cover their costs let alone make profit then it’s easy to understand hesitancy but there are lots of reasons to feel positive about lettings’ going forward.

Signs of recovery in London’s rental market

There are now clear green shoots of hope for the rental market. With the furlough ending and the big London firms calling their staff back into the office, the city is slowly returning to some kind of new normal. Confidence is driven by demand so as the workers return so does the market. The success of the vaccination roll out programme has increased hope that we are coming out the other side of the worst of the pandemic. If you are thinking about becoming a landlord then we can help support you with our letting management team, talk to us about how we can help.