The rental market was badly hit by the pandemic, with the consequent lockdowns resulting in offices, consumer outlets, entertainment venues and the hospitality sector having to close. Cities, especially inner London, were the worst affected. With the fast progressing economical development in the SouthEast region, areas there also saw a fall in rentals, as the Letting agents in Buckingham will agree.
However, now there is hope for a pre-pandemic situation to reappear, with the Covid vaccination programme successful and business returning to normal. Hence, the cloud on the horizon of the rental market seems to be dissipating. London, especially, can look forward to recovery of rents.
Spacious accommodation: Restrictions on movement and having to live and work at home during the lockdowns caused a trend for larger space. People started looking for houses with more rooms, additional office space, and a yard outdoors for a garden and/or relaxation.
Many people moved to suburbs and rural areas to maximise this priority. However, with a near return to routine, people are still looking for more comfortable and less cramped accommodation in the cities. Apartments with balconies provide some outdoor areas for potted plants, and some have a common outdoor area for relaxation. These are usually available on the periphery of central London. This type of accommodation will reflect on the rental market in cities.
Return to normalcy: With the hopeful return to business as usual, offices, shops, restaurants, pubs and entertainment hubs are likely to reopen.
● Though some employees will work part-time from home, many are looking forward to returning full-time to offices to take advantage of training and collaboration programmes. Such people will be looking at housing with low commuting costs, or preferably, within walking distance of their offices.
● Hybrid working – part time in office and the rest at home – seems that smaller office accommodation would be required, but with the need for social distancing and more office space per person, this requirement could be offset.
● There is a likelihood of overseas professionals, some of whom had left London during the pandemic, looking to return to careers in London. This will lead to more renting requirements.
● Student rental looks promising, with schools and universities reopening.
Foreign investment: London has always attracted property investors from abroad. With international travel regulations no longer restricted, foreign investors are able to visit and conduct personal viewings of properties. Some of them are willing to comply with the necessary quarantine regulations to be able to attend and bid at auctions.
Demand lacks Supply: London regains its popularity, with many looking forward to their pre-pandemic lifestyles by returning to the city. Last year (September 2020) saw an increase in the number of homes available to rent from the previous year. However, in June 2021, there were 8% fewer homes to rent than in 2019. There will continue to be a demand for rental accommodation, even though the housing supply may not be able to keep up with the requirements. This shortage in supply will also reflect in rental prices.
Logistic companies: These firms, involved in managing how goods are acquired, stored and transported, were badly affected by the pandemic. The necessity of online shopping has made customers depend on one-day or same day deliveries. Hence, the focus on urban logistic centres is replacing the old country warehouses to save on transportation and time. Quick home delivery grocery services and pick up points for Amazon goods have emerged.
Longer rental periods: Recent surveys show that a large percentage of the people still intend to rent rather than buy, at least for the present. This mainly applies to the younger generation who still have to decide on where they would like to settle down. Also, long-term rentals have increased, as people plan for a normal lifestyle. Renting for longer periods offers security both to the tenant and the landlord and this is essential in the current situation.
Incentives for purchase: The SDLT holiday, though coming to a close at the end of September 2021, still offers a tax benefit on the first GBP 250,000 on property prices. Low interest rates and attractive mortgage schemes are added incentives for prospective property buyers. London is the most expensive area where the property is concerned; at the same time, it offers a good ROI (return on investment). This is the time before the rebound to pre-pandemic levels sets in. A good look at all aspects of property purchase would be advisable for investors.
Conclusion: Despite a predicted rental recovery in London, the increase in rental prices at present may not be as high as pre-pandemic times. However, as demand grows, so will the rental prices in the foreseeable future. Of course, the affordability factor has to be taken into account, especially with the furlough scheme coming to an end with effect from October. However, with the probability of employment opportunities reopening and depending on the economy (which hopefully will not face any macroeconomics shocks), London looks all set to recover from the rental crisis.