With the ‘Stamp Duty Holiday’ putting all the attention on the house buying market, there’s been less attention on what’s happening in the rental market. What effect has lockdown had on the rental market? Are people trying to escape renting in the cities? What’s happening to rental prices? Are they increasing?
The ‘lockdown effect’
There’s no doubt the coronavirus pandemic has had a huge impact on everyone’s life. As a country, we have been put in three national lockdowns and an ever-changing three-tiered system, all to try fight against the spread of Covid.
We’ve also seen the government try to offer financial help where possible, with the likes of furlough being an example. In regard to the property market, the most notable financial help was the introduction of the ‘Stamp Duty Holiday’ in July 2020 to try stimulating the house buying market.
However, there’s been no real consideration for the rental market and the ‘lockdown effect’.
According to Homelet, the average rent price in the UK in January 2021 was £981, up 0.2% on the previous month and 2.9% on the previous year. Out of the 12 regions, there has been an increase in 10 of the regions, with the South West showing an 8% increase in January 2021 compared to January 2020.
The average rent in London is falling year on year, with a 3.9% decrease between January 2020 and January 2021.
These changes in rent prices could be as a result of the lockdown effect.
Why is this happening?
With lockdown, everyone is spending more time in their homes, naturally as there’s nowhere else to go and a lot of people now work from home, leading to people re-evaluating their houses. This has caused a change in priorities, with them wanting to move to somewhere with more space, inside and out.
These changes explain the fall in London’s rent prices, as people want to escape the city and head to places with more space, meaning a fall in demand for London rentals.
The change to priorities also explains the rise in rent prices to other regions, with the South West being the biggest increase. In the South West, are areas, such as Cornwall and Bristol, which have large amounts of space, land and beaches, causing renters to flock there to satisfy their needs for space.
The South West is also a fairly short train ride away from London, for those who may still need to commute for work.
There have also been increases in rental prices much further North, with Yorkshire & Humber seeing a 4.5% increase and the North West a 1.4% increase, further showing the increasing demand for more space and less ‘city living’.
What does this mean for the future?
With the unpredictability of when we will be put into a lockdown and how long it may go on for, it’s likely we will continue to see rises in demand for regions outside of London, until we eventually get on top of the coronavirus pandemic, however long that may take.