London’s housing crisis has reached a “disastrous” new low as research reveals a huge drop in the number of available properties to rent in the capital.
Lettings in London have fallen by 41 per cent since the pandemic, further squeezing supply and deepening the homelessness crisis, according to a new study by Savills and the LSE.
While listings fell nationally by 33 per cent, London has been the worst hit. The report found listings for one, two and three-bedroom properties shrunk by about 36 per cent, and there have been even larger falls in listings for four-bedroom properties.
The reduction in listings has come amid a period of soaring rents, with the report finding asking prices on lettings are now 20 per cent above their pre-Covid level.
The slump has been caused by a range of factors including landlords leaving the sector or reducing rather than expanding their portfolios.
The number of rental properties being advertised for sale has more than doubled since the pandemic, and the proportion is rising. Tenants are also staying in properties for longer, as tenancy lengths nearly double.
Listings have fallen more in inner areas, the report found, and boroughs with more rental properties such as Westminster, Tower Hamlets, and Kensington and Chelsea have been worst hit. In Westminster, the council said they were not only concerned with finding affordable rentals, but any private rentals at all.
“This research is the latest evidence of how the capital’s broken housing market is worsening the unsustainable and increasingly unmanageable pressures we face in London,” said Darren Rodwell, executive member for regeneration, housing and planning at London Councils, which commissioned the research. “A bad situation is now becoming disastrous.”
The report comes amid warnings that homelessness in the capital will soon reach record levels. London Councils is predicting that by August, households in temporary accommodation will exceed London’s highest level of 63,000 in 2005.
The shortage in rentals is causing a headache for local authorities who rely on the private sector to find accommodation for homeless households. The number of households being placed in B&Bs is also rising, with February placements 167.2 per cent higher than 12 months previously.
For the lower end of the market, the shortage in rentals is also compounded by the Government’s decision to freeze Local Housing Allowance, which governs the amount of support for low-income private renters. The benefit has been kept fixed at its April 2020 rate, despite private rents soaring since then.
The report found that only 2.3 per cent of properties available to rent in 2022-23 were affordable to those relying on LHA to cover housing costs. This is down from 18.9 per cent in 2020-21.
According to London Councils, the Renters Reform Bill currently making its way through Parliament was expected to bring “some positive changes” to the private rented sector, including banning no-fault evictions.
However the body has called on ministers to take “further measures” such as raising LHA to cover at least 30 per cent of local market rents and boosting investment in more affordable homes.
