Some tenants are taking drastic action to secure homes in the frenzied London rental market, with surging prices in a landlord-driven landscape.
The average London rent has increased by around 15 per cent over the past year, according to the SpareRoom Rental Index, while in the prime central market Savills has reported that tenants are paying around 13.5% more than last year.
Alongside rising prices, the London rental market – like many other parts of the UK – is experiencing a shortfall of available homes compared with the huge numbers of tenants searching. All of this is leading to bidding wars among tenants as competition for the best homes soars.
London estate agent Chestertons has noted that some tenants are resorting to offering above asking price, further exacerbating the rising cost of renting.
Richard Davies, managing director of Chestertons, says: “We continue to see tenants who are really struggling to secure a property in London due to the sheer volume of tenants that are fighting over each new rental property that comes onto the market.
“To try and avoid further disappointment, many tenants are offering to pay landlords more rent than they are asking for, but even this isn’t guaranteed to work. Given the drop in rents that landlords faced during the pandemic; some by as much as 30%; we are now operating in a landlord driven market.”
London rental market homes shortage
Davies points out that between July 2021 and July 2022, the number of rental homes on the market fell by 38%. At the same time, the estate agency recorded a 60% increase in tenants looking for homes.
Chestertons data also showed that 45% fewer landlords were willing to reduce their asking rents, compared with the same month last year.
London landlords have also reported tenants offering larger deposits or up-front rental payments, as well as detailed information about their children or pets as a way of persuading landlords to let their properties to them amid the shortage.
One solution put forward by Mayor Sadiq Khan to solve the London rental market crisis is a rent freeze. While the capital as a whole has actually recorded the smallest rent rises of the whole of the UK, according to ONS data, certain boroughs have far surpassed this.
For example, the mayor notes that rents in Eltham and Mottingham have soared by 19.8% in a year, followed by Lower Edmonton and Abbey Wood with 18.7% and 16.2% increases respectively. He has been calling for a rent freeze for a number of years, based on success in places like Berlin and New York that impose these measures.
Renting for the super-rich
At the luxury end of the London rental market, prices have also seen a surprise post-pandemic increase, according to Savills. It reported that prime central rents had risen at their highest rate in more than 20 years over the past 12 months, by 13.5%.
Again, this has been caused by a serious lack of rental stock in this area of the market. The area stretches roughly from Notting Hill in the west to Covent Garden in the east, and between Regent’s Park in the north and Chelsea Embankment in the south.
Jessica Tomlinson, a research analyst at Savills, said of the prime London rental market: “Prime rental values in London have been steadily recovering from Covid-19 related falls since the beginning of the year.
“In the three months to June, rental values increased by a further 3.3%, bringing annual growth to 13.5% – the highest annual increase recorded in over 20 years – which has more than compensated for the losses seen during the pandemic.
“The ongoing acute lack of stock, continued strong demand from tenants in response to the capital bouncing back to life, and employees returning to offices, means that we can expect pressure on prime rents across both London and the commuter belt, at least in the short term.”
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