New lease of life: young renters lured back to the heart of London

For a long time, Rob Sargent had wanted to live in the capital — then Covid-19 gave him the opportunity. “It was always too expensive, and I wanted a property with outside space, so I rented in Cambridge and commuted to work in central London,” says Sargent, 33, a lead producer at gaming company Zynga.

However, after the pandemic sent rental prices plummeting, he seized his chance and in February signed the lease on a one-bedroom flat in Notting Hill, west London, with a private garden.

“I’m paying £1,451 a month whereas the previous tenant was paying £1,776,” Sargent says. “My rent is still higher than it was in Cambridge, but I save on my commute and wanted to be in a vibrant environment for when restrictions ease.”

Average rents in prime central London in the three months to February were 18 per cent lower than the same period a year earlier, according to LonRes, which tracks the capital’s luxury property market. These reductions, combined with the easing of lockdown restrictions, are starting to draw tenants back. And some, like Sargent, are now able to live in places they could only dream about before.

LonRes says the number of new lets agreed in prime central London in the three months to February was 17 per cent higher than the same period a year earlier. Estate agency JLL says that 87 per cent of the new tenancies it agreed in Zone 1 over the past 12 months were signed by people aged 18 to 39. Overall, just 51 per cent of prime central London residents fall into that age bracket, says Nick Whitten, head of UK Living Research at JLL.

The readjustment in rents might be exactly what London needed

Rob Hill, director at Greater London Properties estate agency, is seeing an increase in the number of flat sharers in Zone 2 areas such as Clapham, in the south-west, or Finsbury Park, in the north, moving to Zone 1 locations such as Soho, Bloomsbury and Hyde Park. “The road map out of lockdown has led to increased interest in London and there is now more of a desire to avoid public transport, which is boosting central areas,” he says.

The figures seem to back him up. The number of lettings agreed on flats in inner London has risen every month since the start of the year, with 46 per cent of flats available to let in March finding a tenant, according to data from TwentyCi.

Flatsharing website Ideal Flatmate, which has about 2,000 London listings per month and 100,000 London users, says search volumes for flat shares in Zone 1 in the first two weeks of April were 47 per cent higher than for the whole of February.

Becky, 28, who only wanted to give her first name, has just relocated from Clapham to a two-bedroom flat in Soho costing £1,408 a month; prior to Covid, it let for £2,383. The property has access to a communal garden and is near the restaurants and shops that have just started to open up on Carnaby Street, while she can walk to many parts of central London within half an hour.

Mariana Santos, 23, an intern at a communications company, was pleasantly surprised she could afford to live in a two-bedroom flat near Hyde Park with a friend. Their new home costs a total of £1,680 a month — before Covid, it let for more than £2,400.

“When we first started looking, in September, we thought we could only afford places further out, but by December, prices had come down even further so we could live really centrally,” she says.

Santos managed to agree her rental price for two years. “It was lockdown and people were still moving out of London so it felt like the landlord just wanted to get it rented,” she adds.

Matt Staton, head of lettings at Berkshire Hathaway HomeServices Kay & Co, says many new renters in central London are pushing for longer-term tenancies to protect against rent rises post-pandemic. “It used to be that a tenant would offer a longer tenancy to make their offer more attractive; now, they are doing so in their own interest, knowing they will never have rental prices this good again,” he says.

JLL’s data reflects this trend, too: in the 12 months to February 2021, it recorded a 15 per cent year-on-year increase in the number of renters agreeing to a tenancy of more than 12 months.

As well as relocating to areas that were previously out of their price range, “opportunist tenants” are looking to move to a larger property with outside space or workspace, says Graeme Young, lettings director at Marsh & Parsons estate agency.

Some of those staying put are also negotiating significant discounts: the chief operating officer of an insurance agency managed to get the rent on his four-bedroom duplex in Paddington reduced about 15 per cent to £3,100 a month when his lease came up for renewal.

Yet, while some have profited from falling rents, overall it is London tenants who have suffered most from the economic fallout of Covid-19. “The impact of the pandemic was particularly hard on the people who rent — they tend to be younger people, the self-employed or people in insecure jobs in the gig economy, all of whom have had less income support,” says Professor Paul Cheshire, emeritus professor of economic geography at the London School of Economics.

There are 2.2m adults in the private rented sector in London, with single-income households on average paying more than 40 per cent of their income to landlords, according to Zoopla. Many have not been able to move, enduring lockdowns, homeworking and home schooling in cramped flats, often with no outside space.

The housing charity Shelter says 19 per cent of Londoners have had to borrow money to pay their rent or mortgage in the past six months. Many have had to move out. Shaiso, 36, was working as a wedding planner and living at her employer’s hotel when she was made redundant in November. “I was starting to get really worried I was going to end up on the streets,” says Shaiso, who received help from Shelter to find new accommodation, and only wanted to give her first name.

The rate of decline in London rents is starting to slow, says Gráinne Gilmore, head of research at Zoopla, with the quarterly decline seen in the three months to February the shallowest since April last year, during the first national lockdown. In prime London, prices are starting to tick up: LonRes says achieved rents rose 1.2 per cent between February and March.

Although there are question marks around what will happen when the ban on bailiff-led evictions ends on May 31 and the impact the ending of the furlough scheme on September 30 will have on unemployment, Neal Hudson, a UK housing market analyst, says the London rental market is likely at an inflection point.

“We will probably see more localised effects, with areas with a lot more supply taking longer to rebound, but we have probably seen the real trough in the rental market,” he says. “Yet, as space continues to be highly prized, houses will continue to be more in demand than flats, at least in the near term.”

As the economy reopens, and as the UK’s vaccine rollout makes the country look more attractive internationally, Hudson believes London rents will start to rise again, although he acknowledges there is uncertainty around the effect Brexit will have on demand from the EU. The capital’s high house prices will also support the lettings market as many people who cannot afford to buy will have to rent.

“Ultimately, London is a great place to live and work — especially if you’re young — and that’s going to continue,” Hudson adds. “The readjustment in rents might be exactly what it needed.”

Rob Sargent is making the most of London’s rental readjustment, having managed to lock in the low price on his Notting Hill flat for three years. “It has been great to soak up one of the most diverse cities in the world as it comes back to life,” he says.

Properties for rent: price cuts

Two-bedroom flat, Chelsea, £1,269pw

A 1,202 sq ft flat arranged over two floors with two terraces. The apartment, which is a short walk from the King’s Road and Sloane Square, is available for a 15 per cent reduction on pre-Covid prices. Let through John D Wood & Co.

Three-bedroom flat, Bloomsbury, £720pw

A 1,104 sq ft apartment within walking distance of the British Museum. The property is available for a 14 per cent discount on pre-Covid prices. Let through Greater London Properties.

One-bedroom flat, Soho, £325pw

A 356 sq ft apartment on Old Compton Street. The flat, which has a newly remodelled interior with wooden floors and underfloor heating, is being marketed at a 28 per cent discount compared with pre-Covid prices. Let through Greater London Properties.

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