Monthly asking rents across the capital have risen by almost a third since the height of the pandemic, taking the average advertised rent to a record £2,631 according to Rightmove.
With the typical household income sitting at £3,066, or £36,800 per annum, this means more than 85 per cent of earnings per dwelling is being swallowed up by rent.
For all the genuine talk of increased costs for landlords, there is no denying that this rental crisis is also partly driven by greed and opportunism as some seize the reality of heightened demand to hike rents.
There are currently 19 people on average viewing every property, according to Foxtons data.
Young tenants and families are being pushed to the edges of London and beyond, further from their communities, employment, schools and childcare.
Winkworth has reported a 20 per cent increase in tenants relocating from London to Reading, but also to Newbury and even Northampton.
This will impact the city’s vibrancy and future.
“The cost-of-renting crisis is a barrier to recruiting skilled workers and a serious handicap to the UK economy,” says Professor Paul Cheshire of the London School of Economics.
He puts the spike in demand and cost of renting down to “uncertainty” after the pandemic, interest rates (which puts homeownership out of reach for many) and “the complete failure by government” to build enough homes.
‘Half of those impacted will have to leave’
Mike Kelly, 32, works for a public affairs firm and rents in the Georgette Building in the Wandsworth Exchange complex on the Wandsworth gyratory.
He wanted to buy his own place at the beginning of the year but his mortgage-in-principle fell through when rates were increased.
He now faces a rent rise of £500 to £2,250.
“I thought I had misread the letter when it came through. I will have to take in a lodger, but I’m one of the lucky ones. I would say half of those impacted in my building will have to leave,” he explains.
Lizzie Simmons, 24, who works in HR, lives opposite Kelly with her flatmate, Chloe Manchett, 34, a recruiter.
"We now have to move to Hertfordshire, which is far away but it is all we can afford”
When they received notice of their 23 per cent rent rise, Simmons put up fliers in the building inviting neighbours to join forces to implore the housing association-cum-developer L&Q to relent.
Some 46 people joined her WhatsApp group.
Among them are young families. Edward Norris, 37, is a graphic designer and his partner is a midwife at Barnet hospital.
Their rent has gone up by £450 a month.
“I am bipolar and this has been very stressful to deal with. My partner works nights and I work in the day so childcare is difficult and we rely on grandparents in Bromley. We now have to move to Hertfordshire, which is far away but it is all we can afford,” he says.
Down the hall, his neighbour is struggling with the financial and parental juggle, too. The 34-year-old financial controller, who wished to remain anonymous, lives with his partner and two children.
“The increase came at a terrible time, just as we were looking for the right primary school and looking after a new baby with my partner on maternity pay. Our mental health has been critically impacted – we don’t want to move out but our savings will be drained by this increase,” he says.
Other tenants talk of taking second jobs or relocating out of London.
Simmons wrote to L&Q asking it to consider a 10 per cent increase, after all L&Q has a tag line on its website that reads, “Our residents are our priority.”
But the company refused to negotiate.
“Rent levels across all our private rental homes are set using market analysis and are in line with the current housing market in each local area. Wandsworth has, in particular, seen a sharp increase in rental values due to its growing popularity, and we are confident that the rents being offered at renewal are reflective of the open market. This is supported by the fact that the building is fully let, barring one home which is reserved,” an L&Q spokesman says.
‘The market is failing the vulnerable’
“Renting out there is as bad as it’s ever been,” says Sue Edmonds, of the not-for-profit organisation Capital Letters.
She places families who are living in temporary accommodation into rental homes paid for by local councils through ‘local housing allowance’.
Recent research shows that two years ago 13 per cent of properties marketed for rent on the portals (Rightmove and Zoopla) were affordable using local housing allowance. This has fallen to just 2.3 per cent, Edmonds explains.
“The market is failing the vulnerable,” she says.
Florist and community support worker Janelle Clarke, 46, has been shunted between four different Travelodges with her two children — both with special needs — when they were evicted from their two-bedroom flat in Harlesden last November. They had lived there for eight years.
“The landlord, who owns a few flats on the high street, wanted us out. I was sent a series of eviction letters and he started construction work above us with no notice,” Clarke says.
Redbridge council placed them in a Travelodge in Harrow, then Ilford, then Feltham. They are now in a flat in a converted office block in Slough.
“We have been treated without any dignity or respect.”
Every day Clarke pays for the three of them to catch the train back to Wembley so the children can go to the same schools.
“My son is autistic and has a place at a special school in Wembley, we cannot move him, it will take years to get another place,” she says.
“We have been treated without any dignity or respect.”
Esther Planas, a 63-year-old artist and student, finds herself in a similar situation. Her monthly rent in Hackney went up by £445 (an increase of 38 per cent) this autumn and, after confirming she couldn’t pay it, she was sent an eviction notice.
“I did tell them [the management agency] that I was hoping to get a grant for my PhD, which would help, but was told there would be no mediation. I am resigned to the fact that I will become a number now, another homeless person. It is very scary,” she says.
Is there any light at the end of the tunnel?
There are early indicators that demand to rent is falling and the number of available properties are increasing, according to a report by Foxtons this month. It cites a 10 per cent increase in supply in the year to September and a 13 per cent drop in demand.
“We are seeing a return towards a more normal rental market — it just took longer than expected,” says Gareth Atkins, head of lettings at Foxtons.
“By Christmas we expect rents to have levelled off.” This is no consolation for those who have endured rent rises of around a quarter, he concedes.
New research by Rightmove reveals the obvious. High prices have pushed tenants to the outer boroughs.
There are four boroughs left with an average asking monthly rent below £2,000: Barking and Dagenham (£1,805 pcm), Bexley (£1,836), Havering (£1,938) and Sutton (£1,938).
In Sutton, for example, there is a family-sized home with three bedrooms for three sharers with a garden on the market through Goodfellows for £2,100 per month, or £700 per sharer.
One-bedroom apartments in the purpose-built block Harkness Court are going for £1,150 (through Martin & Co).
Atkins recommends looking at East Walthamstow and Wood Green in the north-east, Peckham, Croydon, Tooting and Kingston in the south and southeast, and Finchley, Harrow and Stanmore in the north and north-west for pockets that have buzz, amenities and present renters with better value for money.
To stay closer to the centre of London or to reduce rents further, he suggests making other compromises.
“The majority of people flock to Tube stations, so properties around those is typically more expensive. Look to the bus networks and the Overground for cheaper options. If you are near a park then sacrifice having a private garden, or don’t opt for a building with a lift,” he adds.
Councils try to tackle the supply crisis
For those desperate to stay close to the city centre, particularly key workers or those who work night shifts, Westminster city council is providing rental accommodation at a reduced price and running a homeownership accelerator scheme.
This involves three years of paying intermediate rent (at a 20 per cent discount) and help amassing a deposit for those in the borough with a household income of less than £90,000.
A new 112-home complex, on the side of the Grand Union Canal and close to Warwick Avenue underground, offers 50 per cent affordable rental homes. There are one-bedroom flats for £1,200 per month and £1,500 for a two-bedroom for those living locally with a household income of no more than £90,000.
“Normal Londoners cannot afford and do not want homes in over-amenitised apartment blocks"
Over the course of this year and next, Newham council has 1,149 new rental homes in the pipeline.
The council’s housing company Populo Living is delivering 115 homes as part of the Carpenters Estate regeneration while more apartments are coming in Beckton, North Woolwich and Stratford.
A word of warning from Foxtons’ Atkins for developers and councils delivering overpriced, purpose-built blocks (known as build-to-rent).
“Normal Londoners cannot afford and do not want homes in over-amenitised apartment blocks with a Soho House on the roof in Zone 6. The problem London has with new-build rental homes is that we have either five-star hotel-like offerings or the equivalent of a one-star bed and breakfast. There is little in between,” he says.
What’s the answer?
Sadly there is no quick-fix solution that will help anyone looking for a home right now.
But in the longer term, record rents and young Londoners leaving the capital in their droves means the rental crisis is finally being debated in the same breath as the homeownership crisis.
“The Mayor has repeatedly warned of the consequences of unaffordable private rents, which are forecast to reach over £2,700 a month in the capital next year — making the need for a rental freeze even more urgent,” a spokesman for Sadiq Khan tells Homes & Property.
Khan is also calling for the Government to deliver on its promise to ban no-fault evictions — although such reform has been delayed in the House of Commons under pressure from lobbying landlords.
The long-term solution is the increase of appropriate supply.
The London Renters Union that is supporting Clarke in Slough and Planas in Hackney launched a Renters’ Manifesto last month which calls for the construction of 3.1 million council houses over 20 years.
This should free up more private landlord stock for young professionals, keeping a lid on rent rises for them.
