Rents in London may soar to more than £2,700 a month on average next year, new figures have revealed.
The alarming warning came as many landlords ramp up rents by hundreds of pounds after being hit by soaring mortgage bills following more than a dozen interest rate hikes by the Bank of England.
Spiralling rents are heaping further economic misery on many younger and lower income Londoners struggling in the cost-of-living crisis, with little if any savings and as inflation outstrips wage rises. The worsening housing crisis is forcing more young adults to return to live with their parents in a growing wave of “boomerang kids”.
It is also threatening further workforce shortages for businesses in the capital as fewer people are able to live in the city, particularly central areas.
Stepping up his war of words against ministers over London’s housing crisis, Mayor Sadiq Khan said: “Private renters make up nearly a third of everyone living in the capital, but they are being consistently let down by a government that refuses to listen and take urgent action to protect them from even greater financial hardship.”
He hit out a week after Prime Minister Rishi Sunak said he was “stepping in” to try to resolve the capital’s homes shortages, taking a swipe at the Mayor’s house building record.
The average asking rent for all London properties was £2,567 in the three months to June, according to Rightmove — £3,059 in inner London and £2,206 in outer London.
City Hall published its new analysis of future London rents, based on projected increases from property firm Savills of 5.5 per cent this year, and five per cent next year, from the Rightmove average of £2,480 at the end of 2022.
Mr Khan, who has campaigned for the Government to introduce a two-year rental freeze, said the latest figures were a “clear picture” that controls were necessary. Research commissioned by London Councils found there had been a 41 per cent reduction in properties available for private rent in the city since the pandemic.
The study, undertaken by Savills and the London School of Economics, also revealed just 2.3 per cent of listings in the capital on Rightmove in 2022-23 were affordable to low-income households, who use housing allowance to top up their rent payments.
James Watkins, head of policy and public impact at the London Chamber of Commerce and Industry, said: “At a time when London businesses desperately need to draw new, and retain existing, skilled workers, soaring rental costs are not helping to keep key workers in the capital. The concern that rental costs could soar to £2,700 per month could further impede the economic recovery of London.”
A separate study released by London Councils showed that one in 50 people in the capital was living in temporary accommodation, with thousands of families in B&Bs, and more people sleeping rough on the streets.
London Assembly figures found 3,272 people were sleeping rough from April to June this year.
A spokeswoman for the Department for Levelling Up, Housing and Communities said: “Evidence shows that rent controls in the private sector do not work, as they lead to declining standards, a lack of investment and may encourage illegal subletting.”
But Ben Twomey, chief executive of campaign group Generation Rent, called for a “big increase” in affordable and social housing. He said: “Spiralling rents are driving families into poverty and on to the streets.
“The average London renter is already putting 40 per cent of their wages straight into their landlord’s pocket, and this situation shows no sign of improving. Without action, Londoners will continue to face sky-high rents which are forcing the likes of nurses and teachers out of the city.”
