Virus vaccine may save London PRS
- Published: Tuesday 12 January, 2021
- By: Commercial Trust
The private rental sector (PRS) in prime London areas have been particularly adversely affected by the pandemic, with industry professionals recording overall poor performance.
A substantial roll-out of the virus vaccine could, however, be the solution London has been awaiting, according to leading agencies.
Through the vaccine, it is thought that society could start to regain some level of normality, leading to increasing travel rates and the return of many businesses.
Knight Frank believes that this sense of optimism and increased societal and corporate activity could help to diminish factors which are negatively impacting the prime London rental market.
This may give a sense of hope to many, particularly those operating in the private rental market in London.
However, whilst the roll-out of the vaccine is good news for all, how soon can an upturn realistically be expected?
Factors influencing London rental market
In the prime London rental market, it is believed that higher supply and weaker demand are causing some of this adverse performance.
Knight Frank have stated that rents were down by 11.9 percent in prime central London and 9.8 percent in prime outer London, on average.
An increase in supply is attributed to the fact that a significant number of short-term let properties have appeared in the long-term private rental market, in the midst of the pandemic.
Whilst this may normally be considered positive, the pandemic has caused a reduction in the level of international students and business tenants.
As a result of this, demand for properties is drastically lower than supply, meaning that many properties may currently be uninhabited.
It is believed that the effects of this disproportionate supply/demand of rental properties had started to subside in the summer last year, when restrictions eased.
However, further lockdowns in November and the introduction of tier 4 negatively affected the prime London rental market once more.
Knight Frank further comments that central London has been more adversely affected in comparison to outer areas, such as south-west London. This is largely attributed to the nature of the rental market in that area, which has meant that less properties have entered the sector overall.
Ebb and flow in the capital
Despite the introduction of the vaccine roll-out, industry professionals face further challenges, with the introduction of another lockdown.
Until the majority of vulnerable individuals have been vaccinated and Covid numbers are brought under control, the country and the capital must weather the storm.
However, as the nation’s capital city, London will prevail, given time.
Jane Jenrick, regional lettings director at John D Wood and Co, acknowledged that rents in central London are currently significantly lower. However, Jenrick reflects that this may be only temporary:
“The positive news of a vaccine could mean that by Easter, London is a very different city – open for business, and students, and international tenants moving back,”
Albeit, her comments were made prior to the Prime Ministers lockdown announcement.
Another key observation for London landlords, from Hamptons, is that the need for doorstep underground access is not as it once was, given the increase in working from home.
This may prove good news for north London areas such as Crouch End, Muswell Hill and Alexandra Palace and similarly, areas of south and south east London such as Burgess Park and Shooters Hill; according to Olivia Pegrum, who is Hamptons regional lettings director.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.