Tenants leave London in record numbers to seek cheaper rentals outside of the M25

Rapidly rising rents in London over the past year have prompted a record number of tenants to seek refuge outside the M25, new research shows.

Overall, 40 percent of London tenants who moved chose to leave the capital, up from just 28 percent a decade ago.

It’s the equivalent of 90,370 tenants who have left London in the past 12 months, doubling since 2012, according to Hamptons letting agents.

In total, just over 718,000 tenants have left over the past ten years, of which 62 percent are long-term tenants who moved into their home at least four years ago.

While the number of homeowners is nearly twice the number of renters in the capital, renters are moving home more often and are much more likely to leave.

The 90,370 tenants who left London last year are comparable to the 62,210 homeowners who left.

This is a reversal from 2021, when more homeowners than renters left for a single year for the only time in the past decade.

Hot spots for London departures: Hamptons have revealed the locations where the bulk of tenants flock from the capital

The average tenant does not move often. Each of the top ten local authorities with the most renters moving to borders directly on London.

Tandridge topped the list with 52 percent of area tenants moving from London.

However, tenants moving out of the capital are still moving further than homeowners, with 38 per cent moving to the Midlands or the North of England, compared to just 27 per cent in 2019 and more than the 13 per cent of homeowners moving to the same regions.

Due to the pandemic and the subsequent rise of flexible working, many London tenants are leaving the capital to work.

Only 22 percent of leavers left for work-related reasons in 2022, up from 32 percent five years ago.

Leavers are increasingly keeping jobs in the capital while working remotely or occasionally commuting back.

Instead, tenants are leaving to further increase their rents and rent larger homes in nicer neighborhoods.

Leavers disproportionately come from the least affluent corners of the capital. More than two-thirds of tenants leaving London – 68 per cent – came from the most deprived 50 per cent of boroughs, a figure that has risen steadily over the past decade.

Despite having traded to live in a more affluent area, they were still able to move into a home that was 28 percent cheaper than where they previously lived.

Pictured: Tandridge topped the list with more than 52 per cent of area tenants moving from London

Chart shows share of tenants leaving capital for work, according to Hamptons

Rental growth showed no sign of slowing down in January, with average rents up 8.3 percent year-on-year.

This growth rate places January 2023 as the sixth strongest month for annual rental growth since the Hamptons rental index began in January 2014.

Rents rose sharply across the country, but the Midlands and Northern England both posted double-digit increases of 11.2 per cent and 11 per cent respectively, with growth previously running in high single digits.

The pace of growth in London slowed slightly to 9.1 per cent as rents in inner London completed their catch-up to pre-Covid levels, slowing the overall pace of growth in the capital as a whole.

The rental growth of newly let properties in the regions has been revealed by Hamptons

For the seventh month in a row, rents for one-bedroom homes have risen faster than those for larger homes.

Both one- and two-bedroom homes showed faster annual growth in January 2023 than in any month since the rental index began.

In November 2021, the average four-bedroom rent peaked at 126 percent more than the average one-bedroom rent.

However, this gap has since closed as the average rent for a one-bedroom unit has increased by 11.3 percent over the past 12 months, compared to 2.7 percent for four bedrooms.

As a result, the average four-bedroom home will cost 108 percent more than the one-bedroom average as of January 2023, still slightly above the long-term average of about 100 percent.

Pictured: Sevenoaks is also on the list with 46% of tenants in the area moving from London

Harriet Scanlan, real estate agent Antony Roberts in Richmond, said: ‘Rising rents are driving tenants further and further away from central London in the search for a balance between rising rents and utilities with often static incomes.

‘We had a young family with an eight week old who rented in Hampstead at £3,900 per calendar month and moved to Richmond for a better quality of life and to ease financial strain at a rent of £2,700 per month. While the baby was still so young, they thought it wise to move now, before settling into school and day care centers.”

Epping Forest is also on the list with 46 per cent of tenants in the area moving from London (Photo: Epping)

Aneisha Beveridge, from Hamptons, said: ‘The rapid recovery in rents in London over the past year has seen a record number of tenants looking for cheaper options.

‘While the commuter belt is often prohibitively expensive for potential first-time buyers, the low yield means that renting remains relatively affordable compared to buying.

“The number of homes for sale has risen faster here than in the capital this year, enticing tenants to cross the M25.

‘We expect the number of tenants leaving the capital to continue to rise in the near future. People leaving London are generally in their mid to late thirties, looking for more space for a family or simply a quieter life. But as younger generations are less likely to own their own homes, leavers are increasingly tenants rather than homeowners.

While house price growth continues to slow, rents show little sign of deviating from their upward trajectory.

“The number of homes coming onto the market remains well below pre-Covid levels, with landlords facing tough decisions about whether the arithmetic will still work if and when mortgage rates come down. However, the downward trend in interest rates will bring some relief to those who need to take out a new mortgage in 2023.”