Last year saw a record share of London renters leave the capital when they moved, while this year has seen buyers from the capital move the greatest distance ever recorded in search of an affordable property.
In the first quarter of 2023, a peak of 39% of London tenants left the capital when they moved home. Although the share dropped slightly to 36% in the first three months of this year, taking it back to pre-pandemic levels, it is significantly higher than the 27% of London renters who left the capital in the first quarter of 2012, when rents were materially lower.
Inner London rents have risen by 0.4% over the last 12 months to an average of £3,060 a month. While the rate of growth is slowing faster here than anywhere else in the country, rents are still 17% above pre-pandemic levels.
Tenants leaving the capital are heading to locations where their budgets stretch further. Epping Forest, in Essex, saw the largest share of tenants coming from the capital in the first quarter of this year, at 41%. It was followed by Broxbourne, in Hertfordshire, and Tonbridge and Malling, Kent, which saw 40% and 38% of former Londoner tenants respectively. Other locations in the top 20 include Watford, Slough and Luton.
Londoners, who face the highest house prices in the country, are also racking up the miles in order to buy a home. So far this year, they have moved an average of 7.9 miles, the biggest distance since we started recording the data in 2009 and 50% further than they moved a decade ago.
Indeed, over the long-term, all types of buyers are moving further than they used to. In 2021, during the pandemic, average moving distances for homebuyers peaked as they raced to secure as much space as possible – that year, first-time buyers moved an average of 2.9 miles, while mortgaged movers travelled 3 miles.
The phenomenon began to unwind in 2022 and 2023, but higher mortgage rates have reversed the decline – they have reduced households’ spending power and mean they now have to move further in search of a home they can afford, or which represents better value for money.
So far this year, first-time buyers have relocated 2.7 miles, 5% further than they moved in 2019, while mortgaged movers have travelled 14% further. While cash movers have historically moved further than those reliant on loans, they are now travelling 3.9 miles, meaning they are staying closer to their current home than they did during Covid (their relocation distance peaked in 2021 at 4.6 miles).
Buy-to-let landlords are also casting their nets wider. This year, they have purchased a property an average of 5.1 miles away, the highest distance on record – it’s 16% further away than last year and a fifth higher than in 2019.
Many landlords use a mortgage to fund their investments and are increasingly having to seek out the highest-yielding properties in the top-yielding locations in order to make the numbers stack up. So far this year, 21% of landlords have bought at least 50 miles away from their registered home address, up from only 10% in 2014, the year before buy-to-let tax changes were introduced.
Looking ahead, if mortgage rates remain close to where they are today, the trend for moving further is likely to continue. And, from a buy-to-let perspective, unless the yield gap between the North and South narrows considerably – or there’s a significant chance of capital growth prospects improving – buy-to-let purchases will likely become more concentrated in the highest-yielding parts of the country. This could potentially weigh on stock levels in the South of England.
