London has seen a 41% fall in the number of properties available for private rent since the pandemic, amid warnings that turbulence and supply constraints in the private rental market is worsening near-record levels of homelessness across the capital.
The findings emerged from research undertaken by the LSE and Savills and commissioned by a partnership led by the cross-party group London Councils.
London’s buy-to-let market is contracting as landlords exit the sector which, coupled with the freeze to the Local Housing Allowance (LHA) and skyrocketing rents, is compounding the challenges faced by low-income households seeking affordable accommodation and by London boroughs working to prevent homelessness.
London Councils estimates that 166,000 Londoners are homeless and living in temporary accommodation arranged by their local borough.
On current trends, London will see its highest ever number of homeless households in temporary accommodation by the end of the summer, with councils in the capital already collectively spending more than £52m each month on temporary accommodation.
Key findings from the research include:
- Rental listings have fallen across London, with the number of one, two, and three-bedroom properties listed for rent in both inner and outer London down by around 36% since the pandemic (comparing January-March 2023 to the January-March average across 2017-19)
- Listings for four-bedroom properties declined the most. Over the same period, listings of four-bedroom properties almost halved (46.6%)
- Across, one, two, three and four-bedroom properties the overall reduction is 41% down on the 2017-19 average. This reduction in the availability of private rental accommodation is higher in London, compared to a fall of 33% nationally
- At the same time, rental prices listed by London landlords are 20% above their pre-Covid level in March 2020
- The number of rental properties being advertised for sale has more than doubled since the pandemic, and the proportion is rising. This has a clear impact on low-income households looking to rent, and on boroughs seeking temporary accommodation for homeless residents
The researchers also investigated affordability for the 300,000 London households reliant on LHA to meet their housing costs. Eligible households receive LHA as part of their housing benefit or Universal Credit payment if they have a private landlord, and the government has frozen LHA rates since April 2020.
In the face of fast-rising rents, the decision to keep LHA rates frozen has significantly reduced the number of properties affordable in London under LHA. Only 2.3% of London listings on Rightmove in 2022-23 were affordable to those using the benefit to pay their rent – falling from 18.9% in 2020-21.
London Councils and its partners are calling on ministers to raise LHA to cover at least 30% of local market rents and boost investment in building more affordable homes.
Darren Rodwell, London Councils’ executive member for housing, said: ‘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.
‘A bad situation is now becoming disastrous. We’re seeing fast-rising private rents and reduced availability of rental properties against a backdrop of continuing cost-of-living pressures and London’s longstanding shortage of affordable housing. Homelessness is a national emergency but with London accounting for two-thirds of England’s temporary accommodation placements we are at the epicentre of this crisis. Urgent action is needed from the government to help households avoid homelessness and to reduce the number in temporary accommodation.’
Image: João Barbosa