No place to stay: London's rental market facing a 'crisis'

Competition for rental properties is growing in London amid a housing shortage. Credit: ITV

Renters in London are facing rising prices and fierce competition for rooms

By Rhiannon Hopley, ITV News Producer

When her landlord decided to sell the flat they were living in, Solicitor Hannah Wall, 26, and her partner Alex had to find somewhere to move quickly. But the current state of London’s rental market meant that was not an easy task.  

"We weren’t finding anywhere at all," Hannah said.

"You’d show up to viewings and there would be about 30 people waiting outside or it would be one in one out. It was incredibly stressful.

"I was in tears about it most days. It just felt pointless looking," she explained.

As people return to the capital post-pandemic, the demand for housing is rising but changes in the laws and incentives around being a landlord means the number of properties available to rent is falling.  

It is leading to fraught competition between potential tenants who are attempting to outbid each other, a phenomena not usually seen in the rental market, which is pushing up prices even further.

Hannah said they lost out on one property after another potential tenant offered 12 months rent up front – equivalent to £21,000.

Hannah Wall says the stress of finding somewhere to live left her in tears. Credit: ITV London

New research by Shelter reveals that one in five Londoners are behind or struggling to keep up with their rent.According to the online lettings app GoodLord, the average cost of rent in Greater London is now £1,924. It represents a 7% increase in rent in London since last month and 11.5% more since August 2021. 

For Hannah this meant she ended up paying £150 more per month for a one bed flat than she had previously paid for her two bed property. 

But she is relieved to have found somewhere given the competition. Others haven’t been so lucky.  

'Sleeping on sofas'

Sabrina, 23, has lived in London before but says looking for a room to rent this time around was a completely different experience. She messaged 60 people and only saw two houses.

"At that point I just thought ‘I won’t find anywhere’," Sabrina said.

"I was going from friends flat to flat sleeping on sofas.

"It’s horrible. You don’t want to rely on people. I don’t want to go to my mum at this age and say, ‘I need money to pay my rent’,” she added.

When Mollie’s* flatmates moved out, she advertised their rooms on the platform SpareRoom and had 285 responses.

"Some of them were finding me on social media or LinkedIn to message me there asking for viewings too. It’s horrible. You can see how desperate people’s situations are," she explained.

When her landlord subsequently increased Mollie’s rent by 30%, knowing how hard it would be to find another room, she felt she had no choice but to accept.

The increased rent combined with rising energy bills is weighing on her: “I’m so anxious. I’m not sleeping properly,” she said. 

Tenants are outbidding one another to secure properties. Credit: PA Stills

Mollie’s situation is not unusual according to Greg Tsuman, a Director at Martyn Gerrard Estate Agents.

They are seeing viewings for new rentals book out within a couple of hours and wait lists of up to 40 people. 

According to their statistics there was an average ratio of five people looking for a house per property available in June 2021. Just under a year later, in May 2022, this number had risen to 35. 

But for Greg, who is also President Elect of the industry body Propertymark, this situation is not a surprise but a foreseeable problem with supply. 

He said: "When the finance Act was amended in 2015, it changed the way in which landlords could offset their costs against their bills.

"Right now they’re paying tax on rent instead of just their profits. It’s unprecedented in any business.

"Landlords are selling up and we’ve been shouting about it and ringing alarm bells for the last six years. It's not a tenants versus landlord situation. This is a whole sector which is in crisis."

Ben Beadle from the National Residential Landlords Association agrees.

"We see a punitive tax regime, we see greater regulation. This is not a sexy place for landlords to invest and the knock-on effect of this, in the absence of any social housing, is that tenants pay more. It’s a very simple equation of supply and demand,” he said. 

In response, the Department for Levelling up said “We are working to reform the rental market, making sure it offers a fair deal for both tenants and landlords.

“We’ve also provided £4 billion to the Greater London Authority directly, to deliver genuinely affordable housing for their communities.”

Industry experts say a fall in the number of landlords means the amount of property available to rent is shrinking. Credit: PA

The lack of properties means more Londoners are regarded as homeless. The property website Zoopla has partnered with the charity Crisis. 

"Everyone thinks about homelessness as being rough sleeping but the sad reality is that’s just the tip of a very large iceberg," said Zoopla’s CEO Charlie Bryant.

"There are a vast number of people who are either staying with friends or sofa surfing, or in some other form of temporary accommodation,” Charlie added.

He suggested that as well as alleviating pressure on landlords the building of new affordable homes must be incentivised.  

Zoopla’s figures show that the average single person in London is now spending 52% of their take home salary, while couples are spending 26% of their combined income.

With energy bills also set to rise and inflation hitting, rent remains a real worry for many.

Despite only just signing for her property, Hannah Wall is already dreading her lease coming up next year.

She said: "My fears are that they’ll put up rent so we can’t afford it and we’ll have to move or that they’ll want to sell it and we’ll be in the same position. And I can’t go through that again. It was awful."

*Name has been changed

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