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Wednesday, May 31, 2023

London tenants facing ‘increasingly unaffordable’ rents

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Private tenants in London are facing “increasingly unaffordable” rents, the homeless charity Shelter has warned, as high demand and a shortage of properties in the capital has led to intense competition to secure accommodation.

The shortage has led to landlords demanding that prospective tenants compete in a bidding process for properties, while others were being asked for up to 12 months’ rent in advance, according to Ruth Ehrlich, Shelter’s policy manager.

“We are hearing from people every day who are battling increasingly unaffordable private rents, who are struggling to find somewhere to live,” Ehrlich told the Financial Times’s Money Clinic podcast. “And when they do, they’re being forced to jump through really extreme barriers just to access that home.

Research from property site Zoopla found that rental growth in inner London was running at nearly 20 per cent in the first quarter of 2022 and was at 10 per cent in outer London. That compares with growth of around 2 per cent in the first quarter of 2019.

But agents said in many cases much higher rent increases were being pushed through. “We’re seeing reports of 40 per cent rent increases year on year, and on top of the cost of living crisis, it’s pushing a lot of families into financial hardship,” said Gregory Tsuman, director of lettings at Martyn Gerrard estate agents in north London and president-elect of trade body Propertymark.

He added that he had “never seen anything like it for the 20 years that I’ve been in the business”.

Supply of private rented accommodation has fallen sharply in London to a five-year-low after buy-to-let investors sold up or reduced their exposure during the coronavirus pandemic.

On average, letting agencies had 11.8 homes to rent in the capital in the year to date, compared with 21.8 in the five years to 2021, a fall of 48 per cent, according to Zoopla.

Richard Donnell, research director at Zoopla, said: “A lot of the focus has been on the sales market, but there’s actually an even greater supply squeeze in the lettings market and it’s worst in London.” 

Last week, Will a 28-year-old renter based in east London, who did not want his full name used, said trying to find a new place to live after being forced out of his previous flat earlier this year when the rent was put up, had been “really hard work”.

One letting agent asked how much he was willing to offer on a property for rent, warning him that others were offering £300 over the asking price. Last week, he went to seven viewings, adding that about half the properties he saw listed online had been snapped up by the time he responded. “I called for a property I saw listed the same day, and the estate agent said ‘I’ve already given out 30 spots for viewing.’” 

Some prospective tenants said they were being charged simply to view properties. Daniel, 25, who also did not want his surname used, said he was asked to pay a £600 deposit to view a three-bed home in the London Fields area, equivalent to one week’s rent.

Tsuman said a lack of housebuilding and landlords selling up — initially because of the introduction of a stamp duty surcharge in 2016 and then to take advantage of soaring house prices during the pandemic — meant demand was far outstripping supply.

“In May 2020, we had approximately five people competing for each property . . . May this year, that figure jumped to 35 people,” he explained.

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