London landlords have seen demand for their properties fall in the first three months of the year, according to the National Residential Landlords Association.
In a March/April survey of almost 900 NRLA members, landlords who let properties in London were the only group to report that tenant demand had fallen overall when compared with the same quarter last year.
More than half (56 per cent) said they saw tenant demand fall in Q1 while one in 10 (12 per cent) said demand had increased.
In outer London, 45 per cent of landlords reported that demand had fallen, while a third (33 per cent) said it had increased.
Ben Beadle, chief executive of the NRLA, said: “The pandemic has seen a significant shift in where tenants want to rent, with the trend towards home working making inner cities, especially London, far less desirable.
“This poses significant challenges in determining where to invest to meet demand. Investors will no doubt be waiting for the market to settle, and the full roadmap out of lockdown to be realised, before making major decisions about where to invest.
“This will be particularly important as employers make decisions in the coming months about future working patterns.”
Central and outer London were also the only regions where a significant proportion of landlords reported that rents were falling, at 46 per cent and 27 per cent respectively, the NRLA said.
The association added that landlords with property in the capital were more likely to have reduced rents across their portfolio last year, with 46 per cent having reduced them in central London, and a quarter (26 per cent) in outer London.
Across England and Wales overall, three in 10 landlords (31 per cent) said tenant demand for properties had increased in the first quarter of the year.
The survey found that tenant demand was strongest in Wales, where 57 per cent of landlords reported an increase in Q1, compared to 2 per cent who registered a fall in demand.
This was followed by landlords letting property in the South West, where 53 per cent reported an increase in demand, compared to 13 per cent who registered a fall.
It comes after analysis from Rightmove found asking rents in inner London were down by 6.5 per cent in Q1 2021 when compared with the same quarter in 2016, while rents were up by 2 per cent in outer London.
The property portal also found that, outside the capital, there were only seven locations in its analysis with asking rents lower than five years ago.
Tim Bannister, director of property data at Rightmove, said: “Our data shows a stark contrast between the rental market in central areas of London and the market across the rest of Great Britain.
“Agents are telling me that they don’t have enough rental stock to meet the demand from tenants in many areas, while in London there will be some tenants who have a lot more stock to choose from.
“Landlords who five years ago took a longer term view obviously couldn’t foresee the effect that Covid would have on rents, and right now they’ll be doing all they can to prevent voids and hope the drop in rents is fleeting.”
chloe.cheung@ft.com
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