After a period of relative dormancy, London’s rental market is showing robust signs of revival. This comes after new data revealed a 12% rise in the number of tenant applications in April, marking a significant increase for the first time since the beginning of the year. While the demand from tenants is currently 10% lower compared to the same period last year, the fresh influx of applicants indicates a burgeoning momentum as renters seem eager to capitalise on the reduced competition for properties.

The Ebb and Flow of the Market

Gareth Atkins, the Managing Director of Lettings at Foxtons, notes a shift in the market dynamics. “The first quarter of 2024 witnessed a significant influx of new properties in comparison to 2023, which resulted in fewer renters per property, effectively reducing competition,” Atkins explains. This increase in available properties has led to a stagnation in rent prices—a trend that Foxtons had anticipated earlier in January.

Despite the year-on-year decrease in demand, the early figures from the second quarter suggest a promising turnaround. “The slowed supply, coupled with a return to the applicant levels seen in 2023, could signal a strengthening in the rental market if the trend persists,” Atkins adds optimistically.

Climbing Budgets Amongst Tenants

Further insights from Foxtons highlight a steady climb in tenant budgets. The average weekly budget for renters has increased by 3% over the past year. Despite this overall rise, west London remains the least expensive area, with an average weekly budget of £481, marking a 4% increase. On the other end of the spectrum, central London continues to demand the highest costs from tenants, with the average budget there reaching £580.

The average rents across London have also experienced a growth, rising by 3% in April alone. The average rent in the capital now stands at £555, aligning with the increased budgets of tenants.

The State of Listings and Applications

Since the start of 2024, the number of property listings has seen an 11% increase. However, the number of applicants per new listing has dropped by 22% compared to April of last year, with an average of 14 applicants for each new property listed. This decrease in competition per property is a likely factor contributing to the recent surge in applications, as potential renters find more opportunities to secure homes.