London renters at crisis point as number of homes to rent falls

The number of homes for private rent is contracting across London despite growing demand.

The National Residential Landlords Association (NRLA) is warning that, without action to tackle the supply crisis, renters will see their housing choices eroded even further.

According to Government data, the number of homes in the private rented sector in London fell by six per cent between 2023 and 2024. An analysis for London Councils and Trust for London has warned that properties are leaving the rental market at a much faster rate in the most affordable locations in the capital. 

The slump in supply comes despite an average of eight people enquiring about every available home to rent in London, according to property portal Rightmove. 

Demand is only set to remain strong for the limited private rented housing available. Official data shows that waiting lists for social housing in London are at their highest for a decade. Meanwhile, the capital is now the only region across the country where the number of first-time buyers has fallen over the past ten years according to Halifax. 

The mismatch between supply and demand in London’s rental market is driving up rents and reducing tenant choice, particularly for low-income renters. Just five per cent of private rented homes in the capital are affordable for those in receipt of housing benefits according to the data produced for London Councils and Trust for London. The lack of alternative housing options is also making it harder for tenants to hold rogue and criminal landlords to account.   

London needs more homes for social rent and homeownership. But the NRLA warns that the city’s housing crisis will not be solved without a significant boost to the supply of new, high quality private rented accommodation. 

The NRLA is calling for:

•    Tax reform to encourage the supply of new homes to rent that add to London’s overall housing stock. This could include scrapping the five per cent stamp duty levy on homes to rent where a landlord brings one of the over 38,000 long-term empty homes in the capital back into use. 

•    A quicker justice system. When Section 21 ‘no explanation’ repossessions are abolished, responsible landlords need assurance that the courts will process, and enforce, legitimate possession cases more swiftly than at present. Official data shows it takes an average of over half a year from the point a legitimate possession claim by a private landlord is accepted for consideration by the courts through to it being enforced. This includes cases related to serious rent arrears or tenant anti-social behaviour causing misery for neighbours and fellow tenants alike. 

•    A financial package to support investment in energy efficiency upgrades as the Government considers new minimum energy efficiency standards for the private rental market. 

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“Private renters across London are facing the brunt of the housing crisis. The shortage of homes to rent is a one-way street toward higher rents and even less choice for tenants.  

“London needs more of all types of housing, and that has to include homes for private rent. It’s high time for policies that support investment in the homes renters desperately need.” 

-ENDS-
 
Notes:

•    Between 2023 and 2024 the number of private rented homes in London fell by 6% from 1,136,000 to 1,069,000 according to Government data. See table ‘LT 109b rounded’ here.

•    An analysis for London Councils and Trust for London, has found that properties are leaving the rental market at a much faster rate in the most affordable locations to rent in London. It also reported that just five per cent of rental listings are affordable to people relying on the Local Housing Allowance in London. 

•    According to Rightmove, there are an average of 8 people enquiring about every available home to rent in London. 

•    Waiting lists for social housing in London are at their highest for a decade. 

•    It can no longer be assumed that families with children in London will have access to social housing according to research by Loughborough University and Trust for London.

•    London is the now the only region in the UK where the number of first-time buyers has fallen over the past 10 years according to Halifax.

•    There are currently over 38,000 long term empty homes in the capital. 

•    In respect of the courts:

-    With Section 21 repossessions gone, private landlords will be reliant on the courts to consider, rule upon, and then, if need be, ensure legitimate possession cases are enforced. This will include cases such as serious tenant rent arrears or anti-social behaviour which cause misery for neighbours and fellow tenants alike.

-    At the moment, the system is simply not working. Data from the Ministry of Justice shows that it takes an average of well over half a year from the point a Section 8 possession claim (which will replace Section 21) is accepted for consideration by the courts through to it being enforced. That is simply too long.

-    The Government needs to clearly explain what it defines as the courts being “ready” for the impact of the Bill. Despite this pledge from the Housing Minister last September, no detail has been provided about what the Government thinks the system being “ready” means. 

-    In the interests of transparency, the Government should publish the Justice Impact Test undertaken alongside the Bill. We are also calling on Peers to support an amendment proposed by the Liberal Democrat Housing Spokesperson, Baroness Thornhill, which would ensure the Government would have the report on the impact of the Act on the justice system.

•    In respect of energy efficiency rates, the NRLA is calling for:

-    The cap on the amount a landlord is expected to contribute to energy efficiency improvements to be graduated depending on a property’s value.

-    Reforms to the tax system to ensure it supports proactive energy efficiency improvements. The now disbanded Office for Tax Simplification pointed to a tax system that provides no incentive for landlords to pro-actively invest in energy efficiency improvements. For example, while replacing a broken boiler is considered a deductible expense, upgrading a boiler to a more energy-efficient system is not. The Government should respond positively to concerns raised, and proposals made, by the Committee on Fuel Poverty. It notes:

“Currently the major energy efficiency programmes are targeted at the owner occupier sector (e.g. Energy Company Obligation, Home Upgrade Grant, Great British Insulation Scheme) or the SRS (Social Housing Decarbonisation Fund). Previously the Committee on Fuel Poverty argued that the PRS be treated as a commercial sector as landlords are effectively managing a business that should meet required standards. Landlords could be helped to meet these standards through tax offsets for improvements, loans or potentially grants for landlords with a low profit margin in areas of low rental value.”

•    Further information about the NRLA can be found at www.nrla.org.uk.  It posts on X @NRLAssociation.

•    The NRLA’s press office can be contacted by emailing [email protected] or by calling 0300 131 6363.