Tenants in London have saved as much as £1,800 in rent as a result of the Brexit referendum in 2016, according to an analysis of more than 100,000 rental properties listed on the Zoopla property website.
Rent price growth in London is almost 3% lower than the projected rate of growth since the EU referendum announcement, leaving tenants with more money at the end of the month.
Outside of London, rents have been firmer, with the Midlands recording the highest rates of increase, the Landbay rental index shows.
Landbay attributed the “£1,800 Brexit dividend” to reduced demand from migrants from the EU but added that other factors are also at play. It said there was evidence of higher levels of internal migration within the UK, with priced-out young adults leaving the capital for Birmingham, Manchester and other lower-priced cities.
Landlords may have also been fearful of raising rents in the face of banks potentially moving jobs from the capital to Frankfurt, Paris or Dublin.
The impact of EU workers on the London rental market, particularly in central parts of the city, is substantial. Separate research by agents Hurford Salvi Carr found that in 2018, 40% of all rentals in the financial district, midtown areas such as Soho and in the east London area of Canary Wharf, were taken out by European nationals. British nationals who were renting made up just 28% of the London market covered by the research.
John Goodall, the chief executive of Landbay, said: “It’s hard to ignore the impact that the vote to leave the EU has had on property market in London. While tenants are better off, without necessarily realising it, uncertainty in the market has caused a conundrum for landlords.
“Many landlords will have been looking to offset the government’s punitive tax regime by raising rents. However, the uncertainty surrounding Brexit has forced the vast majority to forfeit this to maintain a steady income.”
Separate research by Savills shows that in 2018, the total value of the UK’s housing stock rose by £190bn (2.7%) to reach a record £7.3tn despite slower house price growth. This increase has been attributed to fears about Brexit.
The gains came from the regional markets as London’s residential stock recorded a 1.5% fall – the first since 2009. The capital still accounts for almost a quarter of UK housing value, compared to a fifth a decade ago. London’s housing stock is worth £1.77tn, more than four times the combined value of Birmingham, Manchester, Edinburgh, Glasgow, Cardiff, Bristol, Liverpool and Sheffield – all cities that experienced higher rates of price growth than the capital in 2018.
Lawrence Bowles, residential research analyst at Savills, said: “Our analysis demonstrates the scale of the housing market and underlines the importance of housing to the economies of London and the UK as a whole, both as an asset class and store of private wealth.
“Once again, we see that wealth concentrated in ever fewer, older hands, to the extent that the UK’s over-50s hold a quarter of all UK homeowner equity, while the over-65s in London and the South of England alone account for over three-quarters of the total.
“At the same time, as affordability becomes more stretched, younger households are having to put off buying their first home until later in life. It’s great that we’re seeing more housing delivery, but development will have to make up a much higher proportion of new housing value if we are to come anywhere need building the homes this country needs.”
• This article was amended to correct an incorrect reference to Landbay’s ownership in the third paragraph