London's private rented sector is shrinking, with only 5% of London private rentals affordable to low-income households, this research finds.
What's this?
The analysis, undertaken by Savills and funded by London Councils and Trust for London, looked at the availability of properties in the private rented sector in London.
It represents an update on research published last year that found a 41% reduction in the number of London properties available for private rent since the Covid-19 pandemic (comparing January-March 2023 to the January-March average across 2017-19).
Why does it matter?
A shortage of social housing means Londoners increasingly rely on private renting to have a place to live. 2.7 million Londoners now live in private rented accommodation - and 34% are living in poverty.
If there are fewer affordable private rented homes in the capital, life becomes more difficult for these millions of renters. More people will be pushed into homelessness.
And when people become homeless, their local authority often relies on the private rented sector to provide them with temporary accommodation. But the fewer affordable properties there are, the more impossible this becomes.
Key findings
Only 5% of rental listings are affordable to people relying on LHA
- In April 2024, the government raised Local Housing Allowance rates to cover the lowest 30% of local market rents.
- But this research shows that in July-September 2024, only 5% of London listings were affordable on LHA.
- This is because LHA rates are set from April using rental data from the previous September. In the context of rapidly rising rents, these rates are quickly out of step with real market conditions.
Landlords leaving the rental market has increased sharply
- From April 2021 to December 2023 45,000 rental properties were sold without replacement. This accounts for 4.3% of London’s privately rented homes.
- Homes sold by landlords to owner occupiers are worth £410,000 each on average across the capital.
The rental market is shrinking most in the most affordable areas
- Properties are leaving the rental market at a much faster rate in the most affordable locations to rent.
- During 2023, the stock of private rented sector homes in the most affordable locations reduced by 3.3% per month as a proportion of available listings compared to 2.6% per month across the rest of London.
- The loss of properties at the lower end of the market has a particular impact on the ability of low-income households to access private rented homes and makes it harder for boroughs to prevent and relieve homelessness, including through using properties as temporary accommodation.
Susie Dye, housing lead at Trust for London said:
"It’s no surprise to renters that it’s desperately hard to find a home in London. The government urgently needs to act to make homes more affordable: through ensuring Local Housing Allowance covers the actual costs of renting for those who need it, funding for local authorities to support those made homeless in the broken housing market, and ultimately significant investment in building social housing."
17 October 2024