The research showed the number of one, two and three bedroom properties available for rent across London was down around 36% since when comparing listings from January to March 2023 with the average across the same period from 2017 to 2019.
When combined with a sharp fall in four-bedroom properties – which dropped by 46% – the total decline in private rented properties was 41%. That’s higher than the 33% drop researchers recorded across the rest of Britain.
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The gap between supply and demand in the rental market has seen rents hit record highs while the Office for National Statistics reported that half of the existing tenants they surveyed in February had experienced a rent increase in the last year.
LSE found asking rents listed by London landlords are 20% above pre-Covid levels on average.
In some cases tenants are forced to pay over the odds to secure a home.
One landlord who was part of an LSE focus group said they received 35 enquiries in 24 hours about a vacant property. They asked prospective tenants to give their best offers and received £350 over asking price, with people offering a deposit without even viewing the property.
A lack of affordable social housing has seen more pressure on the private rented sector to fill the void.
That’s the case for people who cannot afford home ownership.
Separate research from Generation Rent, released this week, found that it takes almost a decade for renters to save up for a mortgage deposit. Ben Twomey, Generation Rent’s director, said: “That gets close to two decades for Londoners and even then that’s only possible by sharing with other people into their forties.”
At the other end of the spectrum, the 300,000 London households reliant on housing benefit to make rent are being priced out of the private sector.
The LSE and Savills research found local housing allowance rates covered almost 19% of properties available to rent on Rightmove in 2020/21 after rates were frozen. Now they cover just 2.3%.
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With nowhere to call a home, households are forced to ask for help from local authorities.
London Councils estimated that 166,000 Londoners are homeless and living in temporary accommodation arranged by their local borough. That figure is equivalent to the entire population of some London boroughs – or to the total number of residents of a city the size of Blackburn or Oxford.
Boroughs in the English capital are collectively spending more than £52 million each month on temporary accommodation and have warned suitable accommodation for homeless households is increasingly scarce.
On current trends, London will see its highest number of homeless households in temporary accommodation by the end of the summer.
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The LSE research suggested that landlords are moving away from letting to low-income households in favour of higher rents.
Researchers found 40% of landlords who had rented to low-income tenants have reduced their letting in the last two years. Tenant and council behaviour and the benefit system, as well as increased costs, were cited as reasons why landlords stepped away from providing temporary accommodation or homes for homelessness prevention.
Abigail Davies, Savills’ director, said: “London’s private rented sector, which provides homes for over one million households, is heavily reliant on private landlords.
“The triple whammy of rising costs of borrowing, greater exposure to tax, and regulatory changes means many are exiting the sector, putting downwards pressure on supply against ever-rising tenant demand.”
While the upcoming Renters Reform Bill is set to solve some of the problems around the insecurity and low standards of private renting, more support is needed to help renters meet their housing costs, according to London Councils and its partners.
That means raising local housing allowance to cover at least 30% of local market rents and boosting investment in building more affordable homes, they said.
Sue Edmonds, chief executive of London homelessness organisation Capital Letters, a co-funder of the report, said: “This research makes stark reading, and it is further evidence that our homelessness system is breaking down. This is the worst it has been for 30 years.
“What we need now is a joined-up, holistic approach, encompassing government policy, local government action, and third-sector support to avoid continued unintended consequences with the resultant impact on the wellbeing and life opportunities of those affected. This is turning into more than an emergency, this is a crisis of generational proportions, and it requires immediate action.”
https://www.bigissue.com/news/housing/number-of-homes-for-rent-in-london-has-plummeted-since-the-pandemic/
