Just one in 20 homes listed for rent in London are affordable to low-income families who rely on Local Housing Allowance, new research has revealed.
The analysis also found the capital's rental sector had shrunk significantly, meaning Londoners are finding it increasingly difficult to secure housing.
Between April 2021 and December 2023, some 45,000 rental properties were sold in the capital without being replaced, according to research by Savills and commissioned by London Councils and Trust for London.
Councillor Grace Williams, London Councils’ Executive Member for Housing & Regeneration, said: “These stark figures are the latest evidence of the massive pressures faced by low-income private renters in the capital.
“London’s homelessness emergency is fundamentally driven by the chronic shortage of affordable housing. There are 2.7 million people relying on privately rented housing in the capital. The falling number of privately rented homes and worsening shortage of affordable accommodation are an urgent challenge for Londoners and London boroughs.
“Further action at a national policy level can help us turn the situation around and we are committed to working closely with the government on this important agenda.
“Interventions such as increasing Local Housing Allowance rates to keep pace with rent rises would help prevent homelessness and save public money in the long run.”
London is home to an estimated 2.7 million private renters - around 30 per cent of the population.
Over 400,000 of these – approximately one in seven – rely on Local Housing Allowance (LHA) to cover their housing costs.
LHA rates were raised by 30 per cent in April. It means a household in inner London can get between £163 and £497 per week depending on the size of their home. But local authorities argue it has not been enough. London Councils is pushing for the government to ensure it updates the benefit every year to give it better chance of tracking rents.
The city is grappling with the most severe housing and homelessness pressures in the country.
It is estimating that one in 50 Londoners is currently homeless and living in temporary accommodation arranged by their local council.
Figures show the number of London households owed homelessness support jumped by 15 per cent in the past year alone.
Chris Buckle, Director, Savills Research, said: “The affordability of renting in London has become very stretched and our research shows that loss of homes previously available to rent is adding to the pressure, particularly for those with low incomes.
“Policy solutions that boost the supply of private rented housing, going beyond new housing supply, are urgently needed to help ease the supply-demand imbalance.”
Susie Dye, Trust for London’s Grants Manager, said: “It’s no surprise to renters that it’s desperately hard to find a home in London if you don’t have the money for a deposit and are on a low income.
“Savills has now given us the best available evidence of this, and it points clearly to the way forward. The government is rightly working to protect renters through the Renters’ Rights Bill. But it urgently needs to act to make homes more affordable through ensuring Local Housing Allowance covers the actual costs of renting for those who need it, funding for local authorities to support those made homeless in the broken housing market, and ultimately with significant investment in building social housing.”
