London rents are forecast to increase by 5.5% in 2022 with current market values to breach pre-pandemic levels, new analysis by Benham and Reeves has found.

The lettings and estate agent revealed that rental values across the capital have not only bounced back from the pandemic dip experienced in 2020, but also breached pre-pandemic levels in all but three areas.

The research shows that between 2019 and the initial pandemic year of 2020, the average London rent fell by -3.4%.

Benham and Reeves said this impact was far greater across many parts of the London market, with Camden seeing rental values plummet -20.7% in a year, while the City of London was also one of the hardest hit with a -12.6% reduction.

However, as London has slowly returned to business in 2021, the research indicates that tenant demand has also returned and current rental values now sit 9.4% higher than they did during 2020.

Benham and Reeves director, Marc von Grundherr, commented: “The London rental market has arguably been the worst hit as a result of the pandemic and we’re unlikely to see a period of such unexpected uncertainty again in our lifetime. Demand for rental homes evaporate almost overnight during the pandemic causing a surplus of stock on the market while rental prices plummeted.

“But the London market is nothing but resilient and when the tide starts to turn, it turns very quickly indeed. We’ve seen house prices in the capital enjoy the largest monthly bounce of all regions in a single month having trailed the rest of the nation for almost two years and the same revival is also apparent across the rental market.

“Demand is lifting and rental values have not only recovered, but they’ve also exceeded levels seen prior to the pandemic.”

He added: “As a result, we can say with confidence that the London rental market decline is now firmly behind us and so any lower confidence forecasts of further price reductions can now be disregarded with yet further positive growth forecast for 2022.”

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