London Rents Experience First Decline in Two Years, Though Still Exceeding £1,000 for a Room
London rental prices have decreased for the first time since February 2021, with the average room rent dropping to £1,019 in December 2023. Despite this decline, January 2023 saw the average rent at £952, still a 7% increase from the previous year. Following a peak at £1,030 in October 2023, the recent trend suggests rents might be stabilizing as the competition for rooms softens from nine renters per room to four, according to SpareRoom.
SpareRoom's director, Matt Hutchinson, expresses hope for a market cooling, particularly as homeowners seek lodgers in January. 2023 witnessed a 7% rise in rental prices, the largest ever recorded by the ONS, with Londoners spending £32.1 billion on rent that year, equating to all the capital's home sales. Zoopla notes tenants are allocating over 40% of their income to rent and anticipates a further 2% increase in 2024. Savills predicts a 5% rise before rents level off, despite London reaching its "affordability ceiling."
The surge in rental prices, partly due to landlords' increased mortgage costs and limited rental property supply, pushes people towards home ownership. The trend is exacerbated by properties being repurposed as holiday lets, a choice incentivized by the tax system over long-term residential lets. Hutchinson criticizes the government for its lackluster response to the housing crisis and calls for policy changes to support long-term renting.
Government interventions, such as the ban on no-fault evictions promised in the Renters Reform Bill, have been delayed. Shelter reports that 300 London renters receive a Section 21 notice weekly, leading to evictions and re-advertisements of properties at higher rents. An example is Precious Adesina, whose rent was raised from £950 to £1,100 before being evicted and seeing her old studio flat reappear on the market for £1,400.
The surge in rental prices, partly due to landlords' increased mortgage costs and limited rental property supply, pushes people towards home ownership. The trend is exacerbated by properties being repurposed as holiday lets, a choice incentivized by the tax system over long-term residential lets. Hutchinson criticizes the government for its lackluster response to the housing crisis and calls for policy changes to support long-term renting.
Government interventions, such as the ban on no-fault evictions promised in the Renters Reform Bill, have been delayed. Shelter reports that 300 London renters receive a Section 21 notice weekly, leading to evictions and re-advertisements of properties at higher rents. An example is Precious Adesina, whose rent was raised from £950 to £1,100 before being evicted and seeing her old studio flat reappear on the market for £1,400.
