Posted on Feb 6, 2023
London’s rental market is in crisis. Here’s why and how renters are struggling
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"Stories about soaring rents and the search for a new place to live taking months are all too common in London right now. The city’s rental market is in crisis, and renters are facing the consequences."
London’s rental market is in crisis. Here’s why and how renters are struggling
Posted from cnbc.com
London
Housing
Posted 1 y ago
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LTC Eugene Chu
..."The root of the crisis
The key issue that has led to this crisis, that saw rents rise by 17% throughout 2022, according to Zoopla, is demand and supply, Donnell explained.
"Supply and demand are really out of kilter at the moment. On the supply side, the average London estate agent would typically have had 17 to 20 properties for rent on their books. That's down to 10 or less than 10 at the moment," he said.
The rent shifts also link back to the coronavirus pandemic, and the sudden drop in demand for rental flats that occurred when London went into lockdown and people could not travel or move there. This caused rents to fall by as much as 10-15%, Donnell recalled.
Laws and regulations also play a role: There are no rent controls in London, and landlords have the option of so-called "no fault" evictions. These allow them to force people to move out even if they have not breached their tenancy agreement, so for example if they do not agree to pay higher rent.
This has led to intense competition for rental properties, Katinka Hill, the regional director for central London lettings at the estate agent Chestertons, said.
"Viewing levels have increased dramatically year on year. Properties aren't staying on the market long, if at all," she told CNBC's Make It.
"We often don't have to to ask tenants to offer over asking price. They just offer over asking price because they've lost out on the last two or three properties that they've bid for," Hill added.
As well as making higher offers, people are also providing bios and pictures of themselves, and are creating resumes for their pets to help secure them a home, she explained.
Looking ahead, Donnell believes rent prices are likely to keep increasing, but probably at a slower pace. Long term solutions are needed, he said. "We really need to see more supply in London. A lot of that's going to come off new build development," he said.
For now however, the situation is likely to remain difficult for London's renters. "
..."The root of the crisis
The key issue that has led to this crisis, that saw rents rise by 17% throughout 2022, according to Zoopla, is demand and supply, Donnell explained.
"Supply and demand are really out of kilter at the moment. On the supply side, the average London estate agent would typically have had 17 to 20 properties for rent on their books. That's down to 10 or less than 10 at the moment," he said.
The rent shifts also link back to the coronavirus pandemic, and the sudden drop in demand for rental flats that occurred when London went into lockdown and people could not travel or move there. This caused rents to fall by as much as 10-15%, Donnell recalled.
Laws and regulations also play a role: There are no rent controls in London, and landlords have the option of so-called "no fault" evictions. These allow them to force people to move out even if they have not breached their tenancy agreement, so for example if they do not agree to pay higher rent.
This has led to intense competition for rental properties, Katinka Hill, the regional director for central London lettings at the estate agent Chestertons, said.
"Viewing levels have increased dramatically year on year. Properties aren't staying on the market long, if at all," she told CNBC's Make It.
"We often don't have to to ask tenants to offer over asking price. They just offer over asking price because they've lost out on the last two or three properties that they've bid for," Hill added.
As well as making higher offers, people are also providing bios and pictures of themselves, and are creating resumes for their pets to help secure them a home, she explained.
Looking ahead, Donnell believes rent prices are likely to keep increasing, but probably at a slower pace. Long term solutions are needed, he said. "We really need to see more supply in London. A lot of that's going to come off new build development," he said.
For now however, the situation is likely to remain difficult for London's renters. "
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