A new study revealed that rapidly increasing rents in London over the past year have prompted a record number of renters to seek refuge outside the British capital. According to the Daily Mail, 40 percent of renters in London chose to leave, compared to only 28 percent a decade ago. This equates to 90,370 renters who moved from London in the last 12 months, with numbers doubling since 2012, according to Hamptons rental agents.
In total, just over 718,000 renters left over the past decade, with 62 percent having been long-term renters who moved to their own homes at least four years prior. While the number of homeowners in the capital exceeds that of renters by about two to one, renters tend to move to their own homes more frequently and are more likely to leave. Last year, 90,370 renters left London compared to 62,210 homeowners.
This marks a reversal from 2021 when more homeowners than renters left in a single year for the first time in the past decade. The typical renter does not tend to move far, often relocating to one of ten border areas with London. Tandridge topped the list, attracting 52 percent of renters.
However, renters leaving the capital still tend to move to farther locations than homeowners, with 38 percent relocating to the Midlands or Northern England, up from just 27 percent in 2019, and more than 13 percent of homeowners moved to those same areas.
The COVID-19 pandemic and the shift to remote work resulted in a decline in the number of renters leaving London for work-related reasons, with only 22 percent citing work as a reason for leaving in 2022, down from 32 percent five years ago. Those remaining increasingly retain their jobs in the capital while working remotely or returning occasionally. Instead, renters are leaving due to rising rents and are opting for larger homes in better neighborhoods.
The renters leaving disproportionately come from the less affluent areas of the capital. More than two-thirds of those who left London, 68 percent, came from the most deprived 50 percent of areas, a figure that has steadily increased over the past decade.
Despite trading up for a wealthier area, they are still able to move into homes that are 28 percent cheaper than what they previously lived in compared to the previous year. This growth rate positions January 2023 as the sixth strongest month for annual rent growth since the Hamptons rental index began in January 2014.
Rents have risen sharply across the country, but both the Midlands and Northern England recorded double-digit increases of 11.2 and 11 percent respectively, while previous growth came from high single-digit figures. The pace of growth in London slightly declined to 9.1 percent, as inner London rents completed their recovery to pre-COVID levels, slowing the main growth rate across the capital as a whole. One-bedroom and two-bedroom homes experienced faster annual growth in January 2023 than any month since the rental index started.
Back in November 2021, the average rent for a four-bedroom home peaked at 126 percent more than the average rent for a one-bedroom. However, this gap has since closed against a backdrop where the average rent for a one-bedroom has risen by 11.3 percent in the past 12 months compared to 2.7 percent for four bedrooms. This leaves the average cost of a four-bedroom home at 108 percent more than the average one-bedroom as of January 2023, still slightly higher than the long-term average of around 100 percent.
