Rents in London and Edinburgh plunge according to SpareRoom and Rightmove

Rental costs in pockets of some cities across Britain have fallen drastically in the last 12 months, two separate reports show.

Rents in Birmingham, Edinburgh and London fell between 5 and 8 per cent in the last year, data from SpareRoom shows – and in one capital postcode, they have plummeted 26 per cent. 

Meanwhile, property website Rightmove says asking rental prices have dropped by as much as 12 per cent in inner London, and 10 per cent in the Scottish capital.

London room rents have declined more than any other major town or city in the UK over the past year and is lead by the EC3 postcode

Thanks to successive lockdowns, a tourist exodus and the increase of working from home, some major cities have seen demand for rental properties plummet.

‘The first national lockdown made people think twice about living in cities, especially London,’ said Matt Hutchinson director at SpareRoom.

‘With another lockdown now underway it’s hard to see that changing any time soon.’ 

Data from SpareRoom suggests that the typical rental cost is up 2 per cent in a year.

But, in London, an 8 per cent drop has seen monthly rents drop from £781 to £715 at the end of the 2020 compared to the year before. 

The capital postcodes where room rents have dropped most over the last 12 months are EC3, Aldgate, falling 26 per cent from £1,154 to £885 as well as SW1, Westminster, Belgravia and Pimlico, where rents fell 23 per cent year-on-year from £1,114 to £886.

Birmingham saw a drop of 6 per cent, with room rents falling from £438 to £413, whilst Edinburgh was down 5 per cent, from £581 to £550 in the same period. 

Some City centres have experienced the greatest rental price falls across the country.

Some City centres have experienced the greatest rental price falls across the country. 

City centres are being deserted 

Most of the change is occurring in city centres where asking rents are falling by up to 12 per cent according to the latest Rightmove figures.

Inner London has been the hardest hit with average asking rents falling by 12.4 per cent over the past year whilst in Edinburgh’s city centre, rents are down 10 per cent.

‘The price premium that many tenants are usually willing to pay to have the vibrancy of a city centre on their doorstep has been tempered for now,’ said Tim Bannister, director of property data at Rightmove.

‘This brings a challenge for some landlords but also an opportunity for tenants who may be able to make a longer term decision and move into a city centre now, perhaps on a two year tenancy agreement, at a more attractive rent than this time last year.’ 

Not all the UK’s largest towns and cities are experiencing this trend however.

Of the 50 largest towns and cities, only 12 saw a drop in rents annually according to SpareRoom’s analysis based on over 450,000 room listings across the country.

The fastest growing cities and towns in the UK were Sheffield and Northampton, both seeing room rents increase by 4 per cent year-on-year.

‘Outside city centres it’s a very different picture, with agents reporting extremely busy markets and rising rents,’ said Bannister.

‘Available stock is lower than the usual level we would see at this time of year, and demand is higher, leading to a much better outlook for those landlords in the suburbs and in smaller towns and villages.’  

The rent drop in the west Midlands appears to be driven partly by a 6% fall in room rents in Birmingham according to SpareRoom.

The rent drop in the west Midlands appears to be driven partly by a 6% fall in room rents in Birmingham according to SpareRoom.

Across all UK regions, East Anglia, Northern Ireland and Yorkshire & Humberside have seen the biggest increase in rents since the final three months of 2019, all rising 4 per cent.

The only other region in the UK to see rents fall, excluding London, was the West Midlands where room rents dropped by 1 per cent.  

Why is this happening?   

Much of it comes down to the simple matter of demand and supply according to Aneisha Beveridge, head of research at Hamptons International. 

In December 2020, there were 55 per cent more rooms available to rent across the country than during the same time in 2019, according to research by Hamptons. 

The figures are being warped by an over supply of properties in city centres.

Over the past year, the number of rental properties on Rightmove more than doubled in some city centres, with the biggest jumps in Leeds, up 179 per cent, Inner London up 139 per cent and Nottingham also up 139 per cent.

According to Hamptons there are 141 per cent more rooms available in London in December 2020 than there were in December 2019.

According to Hamptons there are 141 per cent more rooms available in London in December 2020 than there were in December 2019.

This surge in the supply of available rooms is putting pressure on rental prices in some areas.

‘The spread of Covid-19 and the impact this has had on people’s living arrangements has also affected room rents,’ said Beveridge.

‘With more younger people choosing to move back in with families to save on rent, the supply of rooms available to rent has surged.’

‘The impact of Covid-19 has been greater in London, particularly given the fall in the number of international students coming into the UK.’  

London postcodes which experienced the greatest room rent falls throughout the past year.

London postcodes which experienced the greatest room rent falls throughout the past year.

The situation in London

Swathes of London have recorded dramatic rental falls, according to SpareRoom’s analysis.

Eight out of the ten postcodes where room rents fell most sharply were in London’s central zone 1 travel area. 

‘Living in central London is as much about the social aspect, as it is about the convenient commute, and at present, the vast majority of the capital remains closed for business,’ said Marc Von Grundherr, director of Benham and Reeves estate agent.

‘As a result, demand has fallen dramatically causing rental stock to flood the market. 

‘This excess level of stock means that landlords are being forced to accept dramatically lower levels of rent just to avoid lengthy void periods between tenancies.’ 

Of the 120 London postcodes, only nine saw an increase in rent year-on-year, all of which were outside travel zones 1 and 2.

SE20 (Penge) & N12 (North Finchley) experienced the biggest jump, both up eight per cent, whilst in E4 (Chingford) rents were up 5 per cent, and in SE7 (Charlton) rents rose by 4 per cent.

SpareRoom's survey shows 60 per cent of all renters planning to move post-Covid-19 are not looking to move to a major city.

SpareRoom’s survey shows 60 per cent of all renters planning to move post-Covid-19 are not looking to move to a major city.

SpareRoom are projecting a 13 per cent net exodus of renters from London this year based on a recent survey.

It found that 27 per cent of renters in London are planning to move after the pandemic has come to an end, with half of them intending to leave the capital altogether.

‘London rents continue to fall and, as has been the case throughout the past year, it’s the expensive areas where they fall the fastest,’ said Hutchinson.

‘We’re now seeing the biggest drop in London room rents since spring, and there’s no immediate sign of a recovery.’

‘In the short term it means cheaper rents for those who stay in the capital, but longer term it’s going to be more about how quickly industries like entertainment, hospitality and tourism, which London relies so heavily on, recover from the pandemic.’

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