East London speeds ahead in rental growth race
New analysis of rental growth in London over the last seven years reveals a clear regional split, with renters in East London seeing twice the growth of their West London counterparts, according to the latest Landbay Rental Index, powered by MIAC.
Of the nine East London boroughs, the average cumulative rental growth since January 2012 is 21.41% with typical rents now standing at £1,241 per month. Leading the race are Barking & Dagenham (27.66%), Waltham Forest (23.56%), and Bexley (22.02%). The only East London borough that doesn’t make it into the top ten areas of rental growth is Greenwich, which is still above the London average at 15.48%.
Contrastingly, the twelve West London boroughs have seen average growth of just 10.79%, with monthly rents now typically £1,456. Languishing towards the bottom of the league tables are Kingston upon Thames (8.04%), Richmond upon Thames (6.14%), and Hammersmith & Fulham (5.73%). However, boroughs in Central-West London report even lower growth. Camden has seen growth of just 3.78%, and Westminster and Kensington & Chelsea have actually experienced negative growth over the period (-0.77% and -2.31% respectively).
However, when inflation is taken into account (since January 2012, cumulative CPI inflation is 16%) the figures are even starker. In real terms, renters in 21 of the 33 London boroughs have seen a fall in rent. Of these, only one is in East London (Greenwich at 15.48%), while the vast majority of those in West London have seen falls, just two have seen rents rise faster than inflation – Hillingdon (17.12%) and Sutton (16.82%).
Throughout London, three-bed properties have seen the highest growth over the last seven years, with growth of 10.11% compared to two-bed growth of 9.45% and one-bed growth of 8.98%. This trend has reversed over the last year – one-bed flats have seen 0.9% growth year-on-year, while two-beds have seen 0.83% growth and three-beds a mere 0.34%.
Elsewhere, annual rental growth in England (excluding London) is at 1.13%, its weakest point since February 2013. Scotland is the only country in the UK with improving average yearly growth, with annual rental growth of 1.78% in February. Average rent in the UK stands at £1,216, or £772 without London.
We are seeing a cultural shift in London, as demand climbs in the East and traditionally popular areas like Westminster and Chelsea slide down the league tables. While part of this is a function of affordability, other things too are at play. Rising employment and a thirst for flexible living mean renting is more attractive than ever, with a widening commuter belt in the face of developing infrastructure like Thameslink and Crossrail.