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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.
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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.
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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.
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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.
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“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,” Richard Davies told City A.M.
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When the pandemic hit, the market was “flooded with properties” as people drifted to grassier pastures.
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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.
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Tenants were also found to be agreeing to longer contracts, as to lock in with lower, pandemic-era prices.
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Though rents appear to be rebalancing at pre-pandemic levels, Davies explained, rental supply is still reduced.
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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.
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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.
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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.
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“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.
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“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.”
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By Millie Turner
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Source: City AM
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