The impact was far greater across many parts of the London market, with Camden seeing rental values plummet -20.7% in a year, while the City of London was also one of the hardest hit with a -12.6% reduction.
However, as London has slowly returned to business in 2021, tenant demand has also returned and current rental values now sit 9.4% higher than they did during 2020.
The pandemic continues to have an influence, with London’s more peripheral boroughs still seeing the strongest performance. Rents are up 20.1% year on year in Kingston, with Bexley (18.3%), Newham (15%), Croydon (14.1%) and Hillingdon (13.6%) also amongst the largest increases.
The City of London remains the only area yet to recover, with rental values still down -11.4% annually.
While a bounceback from pandemic decline is encouraging, the real positivity lies within the fact that the average London rent is now 5.7% higher than it was in 2019, prior to the market slowdown.
In fact, just the City of London (-22.5%), Camden (-18.9%) and Westminster (-4.6%) are yet to see rental market values return to pre-pandemic levels.
Benham and Reeves also noted that the volume of properties they are seeing let to tenants is up 67% year on year and 22.7% versus pre-pandemic levels, while landlords are now securing re-let rental prices some 10% to 20% higher than they were prior to the COVID-19 outbreak.
With a further revival now coming in the form of foreign tenant demand, the outlook is extremely positive for 2022 and Benham and Reeves believes this confidence in the market will bring a further 5.5% increase to rental values in addition to the market bounceback already witnessed in 2021.
Marc von Grundherr, Director of Benham and Reeves, commented: “The London rental market has arguably been the worst hit as a result of the pandemic and we’re unlikely to see a period of such unexpected uncertainty again in our lifetime. Demand for rental homes evaporate almost overnight during the pandemic causing a surplus of stock on the market while rental prices plummeted.
"But the London market is nothing but resilient and when the tide starts to turn, it turns very quickly indeed. We’ve seen house prices in the capital enjoy the largest monthly bounce of all regions in a single month having trailed the rest of the nation for almost two years and the same revival is also apparent across the rental market.
"Demand is lifting and rental values have not only recovered, but they’ve also exceeded levels seen prior to the pandemic. Even better still, we’re seeing further positivity in the trenches and this current market activity is yet to materialise at a topline level where market statistics are concerned.
"As a result, we can say with confidence that the London rental market decline is now firmly behind us and so any lower confidence forecasts of further price reductions can now be disregarded with yet further positive growth forecast for 2022.”
