London Landlords Pessimistic on Rent as U.K. Housing Loses Steam

London’s home letting agents are growing more pessimistic about the outlook for rental prices after the coronavirus pandemic fueled a flight from the capital.

That’s the conclusion of a survey by the Royal Institution of Chartered Surveyors, which detected a broader slowdown in the U.K.’s housing market in December. London is the only part of Britain where rents are expected to fall in the next three months.

Covid-19 hit London hard and the new variant of the virus is spreading rapidly, helping trigger a third national lockdown. With many now working from home, residents are looking for more space outside of the city after years in which the capital’s housing market outpaced the rest of the country.

That shift, alongside a temporary property transaction tax cut, has helped to fuel a boom elsewhere, inflating house prices even as the country faces a double-dip recession. New buyer demand, listings and sales continued to rise in December, albeit at a slower pace.

“Although the housing market remains open for business in the midst of the latest national lockdown, there is a sense from respondents to the survey that the new restrictions will still impact on transaction activity over the coming months,” said Simon Rubinsohn, chief economist at RICS. He remained optimistic that prices and rents nationwide will improve as the coronavirus crisis eases.

Here’s a roundup of comments made by agents in the RICS survey:

Simon Aldous — Savills lettings in London:

“It is a challenging market especially in central areas but there is demand in outer London areas for family homes. This clearly reflects the needs to work from home and reduced requirement to be close to the office.”

James Perris — De Villiers in London:

“Reasonable demand for December as buyers continue to take advantage of the stamp duty holiday and the upper tiers of the market continues to recover. This third lockdown may see small flats without outside space difficult to value and sell.”

Peter Buckingham — Andrew Granger & Co in the East Midlands

“Surprisingly buoyant market as we head towards the end of the Stamp Duty holiday. Although we are currently in lockdown, the demand for the limited number of properties on the market has been strong. Signs are that this will continue beyond the deadline as buyers seek changing lifestyles.”

Michael Darwin — Darwin and Sons, Yorkshire:

“Demand for property remained strong until Christmas but uncertainty in the New Year may affect demand.”

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