Around £21.4bn is generated in rental income in London alone, which equates to some 4.3 per cent of the city’s GDP according to new research.
The research, from Sequre Property Investment, found that – unsurprisingly – the capital topped the list as the region with the highest rents and the most privately rented homes.
Across the UK, the average tenant pays £12,636 in rent each year, equating to total rental income in excess of £69.4bn across the 2.2m privately rented homes, worth 3.2 per cent of the country’s total GDP.
The figure could have been higher had landlords not dragged rent prices down to entice people back to the capital after pandemic restrictions led to an exodus.
“Pre-pandemic, at the beginning of 2019, the rental market was in a very strong position. The demand was strong. There was probably a shortage of good stock, so demand was slightly outweighing supply,” head of lettings at Chestertons Richard Davies told City A.M.
When the pandemic hit, the market was “flooded with properties” as people drifted to grassier pastures.
Which led to more short-let properties going into long-term market, as AirBnB owners turned their holiday properties into homes as tourists and travellers dried up.
Tenants were also found to be agreeing to longer contracts, as to lock in with lower, pandemic-era prices.
Though rents appear to be rebalancing at pre-pandemic levels, Davies explained, rental supply is still reduced.
Since the third quarter of this year, rents have begun to climb again and are back up to 2019 levels and in some areas, maybe slightly higher, he said.
Davies expects the trend to continue through to end of the year, which he says is ”great news for landlords” after a particularly tough year.
The director of London-based estate agent, Benham and Reeves, Marc von Grundherr agreed, as easing restrictions have given way to an influx of demand for city life once again.
“London remains the beating heart of the private rental sector both in terms of the sheer number of rental properties and the income generated from them,” he said.
“The end of lockdown restrictions and a return to the workplace have already rejuvenated demand and we expect the market to be firing on all cylinders before the year is out.”