London rent crisis: Rents are at their highest on record

By Lucy Fitzsimons

Londons private rents are at their highest on record as demand continues to soar.

Research by Rightmove found rents in London were at an average asking price of £2,343 per month in September.

This is a 16% rise over the past 12 months - the fastest ever rate of any region.

Outside of London, rents have also hit a new high at £1,126 per calendar month, rising by almost 12% in the last year, the same research showed.

With record high rents amid the cost-of-living crisis, over half a million renters in London are either behind or struggling to pay their rent - a 48% increase since April 2022 - according to the charity Shelter.

Despite demands to freeze rents, the government has so far insisted it will not cap rents.

How much has rent increased by?

Across the UK, rental prices have increased by almost 15% since 2015, statistics from ONS show.

In the last 12 months, figures show private rental prices grew by 3.4% in England - the highest 12 month growth rate since November 2008.

Northern Ireland saw the highest annual rental growth at 8.4%, followed by Scotland at 3.6%, and Wales at 2.5%.

In London, more than one in seven renters experienced a rent increase in the month of September, figures from Shelter reveal.

Generation Rent, a renters rights campaign group, also found 45% of private renters were asked to pay a higher rent in the past year - with 9% facing an increase of more than £100 per month.

Soaring rents also mean that more than two in five London renters are spending at least half of their income on rent, Shelter found.

In the graphs, the house price index measures the price change of housing as a percentage change from a specific date.

Why is rent increasing?

There is a record number of people looking for rooms in London, but a serious lack of supply.

Data from Spareroom found 106,000 people looking for rooms in London this August, but only 15,000 places advertised on the site.

The estate agency Chestertons also found demand outweighs supply, revealing a 38% decrease in the number of properties on the market from July 2021 to July 2022.

While there are less properties on the market, tenant enquiries were up by 60%, the same study found.

Dan Wilson Craw, deputy director at Generation Rent, described how rents have been increasing since the end of the Covid restrictions in 2021.

With more people moving back into cities, there aren’t enough homes available to meet the demand leading to rents going up, he said.

“Many landlords see the rising rents in the market and see that as an opportunity to get a higher rent – if their current tenant cannot afford it, then they will easily find someone else who can," Dan said.

“It’s very difficult for tenants to challenge a rent increase given market conditions and the ability for landlords to evict you without needing a reason."

There is also a lack of affordable housing in the UK.

A lot of social housing has been sold to the private sector through Right to Buy or demolished and either not replaced at all, or replaced with private housing.

Patrick Dunne, Group Secretary at the renters union Acorn, said he was worried the remaining social stock in his area will be sold off over the next 10 years.

"The reality is buy-to-let landlords will buy up those properties, they’ll rent it out at higher rents because their interest is to make profit on them, and that will drive up prices for everyone else.

"At a time when other things are getting more expensive and wages aren’t really moving up, it will lead to lots of peoples living standards dramatically declining, and that has to be stopped."

Patrick Dunne explains how the issue with supply and demand is leading to a power imbalance between landlords and tenants.

How is this impacting tenants?

The number of tenants being evicted by private landlords after falling behind on rent is at its highest since records began, Ministry of Justice figures from August showed.

Over a three month period from April to June 2022, 4,831 court orders were issued for possession of properties because of rent arrears.

This is higher than the pre-Covid peak of 4,648 between the same period in 2019.

Furthermore, the statistics show 3,405 households were evicted over the three month period, increasing by 39% increase on the previous quarter.

Renters experiences

For tenants looking to move, the lack of rental stock is leading to fierce competition, where blind bidding, video interviews and deposits to simply view properties is becoming more common.

Some people have been pushed out of London completely because they cannot find a property within their budget.

Peter Kirkman had to move back home after not being able to find a property in London

Peter Kirkman had to move back home after not being able to find a property in London

Peter Kirkman, 24, from Darlington, moved to Maida Vale last September.

He paid £635 per month for a room in a four bedroom flat, excluding bills.

When Peter first moved to London in 2021, he said he was surprised to find a property quite easily.

But this year, he said it was completely different; once his tenancy came to end, he struggled to find a new property and was forced to leave London and move back to his family home.

Kirkman said: “I straight away realised a difference in the market this year, with estate agents not responding to emails and every phone call ending with 'it’s already gone'.

“At the beginning of August the living arrangement with my uni mate fell through, putting me in the weaker position of searching by myself.

“As my other friends had already sorted out their living arrangements by this point, I was truly in the deep end.

“With 3 weeks to go, I resorted to Spareroom sending off dozens of messages a day for significantly overpriced rooms whilst hearing very little back.

“After a few viewings and interviews, I was still unsuccessful and with August being the busiest month at my job at the time, it made attending viewings incredibly difficult.

“Feeling completely defeated, I once again ended up moving back up north into my parents house."

Luckily Peter had a remote job starting in September, so he didn't have to leave his employment.

But he said he was disheartened to leave his life and friends behind in London, and gave himself some time off from the relentless flat hunt.

“Being back on the house hunt since the beginning of October, I'm still yet to move back.

“Still spending an obscene amount of time sending messages into the void of Spareroom, whilst not yet discovering any leads through family or friends.

“On the rare occasion of actually hearing something back from inquiry, the next issue becomes competing against the other people ‘blessed’ with a viewing… attempting to make yourself sound idyllic and a perfect housemate.

“Often the viewings are organised last minute and at unreasonable times, with landlords not offering video calls, resulting in costly train fares to travel hundreds of miles south with the uncertainty of not knowing if you will even be offered the room.”

Other flat hunters have spoken about having to provide their LinkedIn profiles in order to be considered, and recording a video interview for existing tenants to watch.

Lou Newton, a freelance journalist, posted on Twitter about her experience looking for a new room in London.

She tweeted: "I was asked to send a video of myself explaining my cooking habits and what TV shows I like. All the videos were going to be sent to the existing tenants who were going to watch them and decide who they liked the look of, and those people would be able to view the property.

"I was asked to blind bid for a room. All offers had to be over £1,100pcm and the room went to the highest bidder.

"A group of girls who were renting out the fourth room in their home asked applicants to provide their LinkedIn profile and wrote 'those who don’t send a LI link won’t be considered.'"

For existing tenants, many are experiencing steep rent increases.

Bryn, 23, moved to Elephant and Castle in August 2021 and lives in a four bed house.

As a household, they currently pay £2,650 a month, however in February, their rent is going up £900 per month - which is a 25% increase.

This means collectively they will pay an extra £10,800 over a 12 month period.

Individually, Bryn will have to pay an extra £180 per moth.

Bryn said: “The estate agents know they’re able to charge that amount because that’s what people are paying for similar properties now.

“But I think the demand for housing is so high that even if we were to say we will move out, it wouldn’t be much of a problem for the estate agents because there’s so many people looking to move into London, they would easily find someone willing to pay it.

"Not everyone has the luxury of a pay rise and even if they do, it’s never as much as 25%.

“It extends the burden of where the amount you are earning is becoming disproportionate to the amount of cost-of-living.

“This effectively makes it impossible for people of this generation to save enough to ever afford a house."

Bryn describes his reaction to his rent increasing

Calls to freeze rents

A rent freeze would limit how much landlords can increase the price of rent each year.

In England, the Conservative government has so far rejected the idea of a rent cap, despite calls from housing unions and campaigners.

The Mayor of London, Sadiq Khan, has repeatedly called on the government to give him the power to freeze rents in London for two years.

He said it will help to save Londoners £3,000 in rent amid the cost-of-living crisis.

Generation Rent and Acorn are two of many campaign groups calling for the government to freeze rents and pause section 21 no-fault evictions.

Wilson Craw said: “Without these measures, more people will be forced to compete in an exceptionally difficult market.

"The lack of affordable homes mean people will be priced out of their local areas, and face longer commutes and separation from family and other support networks.

"Many tenants will simply be unable to move and face eviction and homelessness.

"In these cases councils will have few options but to put homeless families in bed and breakfasts."

I asked why Acorn is calling for the government to intervene and put a cap on rents.

Dunne said: “Because I would fear what would happen if not.”

Rent freeze in Scotland

In Scotland, Nicola Sturgeon capped rents for private and social tenants until at least March 2023 to help people during the cost-of-living crisis.

The emergency legislation was passed by the Scottish Parliament in October.

Speaking to MSPs at the 2022-2023 Programme for Government, Sturgeon said: “The Scottish Government does not have the power to stop your energy bills soaring, but we can and will take action to ensure that your rent does not rise.

“By definition these are temporary measures. But they will provide much needed security for many during what will be a difficult winter.”

However, Landlords and letting agents are now considering legal action against the legislation after concerns the cap may breach their rights.

Impact on Landlords

The National Resident Landlord Association (NRLA) opposes the introduction of rent caps as they say it will worsen the supply issue and exacerbate the problem, leading to negative outcomes for tenants.

Instead, they are calling for the government to increase the local housing allowance.

Research from the NRLA found 23% of private landlords in England and Wales planned to reduce the number of properties they let over the next 12 months.

This is a 20% increase on the year before.

James Wood, policy manager at the NRLA, said: “I can see a situation where some people may temporarily benefit from a rent cap.

“But if you introduce a rent cap then at some point that property is likely to become unaffordable for the landlords.

“We’ve already seen mortgage rates rise quite significantly - in some cases they have doubled or tripled - meaning that at a certain point that property isn’t profitable to continue.

“So you may put a rent cap in place but the next stage is that property is probably going to leave the market afterwards which means the situation will get worse over time.

“That’s why we would definitely recommend addressing the cost factor by raising the rates of local housing allowance.”

James Wood explains why the NRLA does not agree with rent controls

Picture credits:

Picture 1: House with to Let signs - Ethan Wilkinson (Unsplash, Creative Commons)

Picture 2: Rents too high - Jon Tyson (Unsplash, Creative Commons)

Picture 3: Houses - Yaopey Yong (Unplash, Creative Commons)

Picture 4: Peter Kirkman

Picture 5: Key - Creative Commons, Pixabay

Picture 6: Red houses - Tierra Mallorca (Unsplash, Creative Commons)