Rents increase at the fastest rate for 5 years, but can it continue amidst rising costs?

Did you know that rents are increasing at the fastest rate for 5 years and yet 20% of London landlords plan to exit the market? We dive into the details and give you our take on what to expect for the rest of 2022 and how some landlords are increasing their returns in the face of rising costs. 

What does the market say?

The current state of the rental market across London has been a hot topic - a shortage of properties on the market and relentless demand have resulted in a strong market for landlords. 

The overall rental picture remains strong, with rents increasing at their fastest rates for 5 years, representing a 21.3% increase year on year in London. Interestingly, Inner London rents are still 3.7% below where they were prior to the pandemic. Average room rents have followed the general market picture, driven by a decrease in supply of 50%.  

Our take on the current market.

At Lyvly, we’ve continued to beat the market with achieved rents at renewal increasing by in excess of 10% in each month of 2022. We’ve seen record demand for rooms, driven by the shortage of housing and the continued return of renters moving to London, including from abroad, reversing the trend seen in the first year of the pandemic. 

Cost of living remains a concern for many, potentially costing the average household an additional £4000 per year. Lyvly’s bills-included service and single monthly rent is therefore proving a real plus point for renters seeking certainty about their outgoings, further driving rents upwards. We’ve had hundreds of enquiries for rooms and our waiting list is building by the day. 

What about property supply?

Reports show that 20% of London landlords plan to leave the market, with 11% planning to reduce their portfolio, showing the impact of rising costs and regulations on investor confidence.

Perhaps because of this, Lyvly has seen increasing demand from landlords over the past two months, with a growing pipeline of new properties in negotiation. A key theme we’re hearing from many investors is that shared-living offers a way to increase the money in their pocket, allowing them to hold on to their portfolios even in a climate of rising costs. Excitingly, many landlords we now work with are exploring purchasing further properties in order to utilise the Lyvly service. 

Many of the landlords we met at the National Landlord Investment Show in March were concerned about rising costs and we’re on track to do business with many, offering them a way to hold on to and expand their portfolio with lower risk. 

Our take on the outlook for rents.

So, what now for the market? As we begin to approach summer, the market typically goes into ‘preparation’ mode as we head towards the undisputed peak market of the year.  It is hard to imagine that despite the continued supply demand imbalance in London, there won’t be some marginal downward pressure on rents as living costs go in the wrong direction (along with inflation). However, London, as we know, has a historical tendency to buck trends.

For more information on how shared-living can help you beat the rising cost of being a landlord, please visit www.lyvly.uk/landlords

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