Rents Still Rising In London

Rachel Holdsworth
By Rachel Holdsworth Last edited 72 months ago
Rents Still Rising In London

Private rents in London have risen 4.5% over the last year, making the average London rent £1,032 a month. A few weeks ago we looked at how renting in the capital is increasingly moving out of reach: a two bedroom flat calls for a combined wage of £52k.

Shelter spent the election campaign calling for a Transport for London-style agency to deal with housing. Boris Johnson has now created a department called Homes for London, but so far it's just the old department with a new name. Shelter has set out what "HfL" needs to do to make a difference to all Londoners:

  • bring all housing budgets and functions into one, public facing, department
  • create a visible position that is accountable for housing (presumably the new Deputy Mayor for housing, Richard Blakeway)
  • set up the new London Rental Standard, an accreditation standard for landlords and agents (this was in Boris's manifesto)
  • publicise the London Rents Map and the First Steps scheme
  • build the promised 55,000 affordable homes by 2015
  • help Londoners get support when things go wrong

All the Mayoral candidates we asked said that housing was London's most pressing problem, but it's one that remains largely hidden to most people until they try to move. The Institute for Public Policy Research agrees with the analysis that London is facing a housing crisis, calculating the city will have a housing gap of 325,000 homes by 2025 unless serious action is taken. We'll be keeping an eye on Homes for London to check it doesn't end up a paper tiger.

Photo by msganching from the Londonist Flickr pool

Last Updated 18 May 2012

Edna

My explanation for the problem is that banks give small credits and to a small number of people and most of the people in London who want to buy property now experience difficulties when asking a loan from them. As a result in the same time private rents have risen.

Will

I'd be surprised if even the people who voted for him think Johnson is going to set up the London Rental Standard.

Small business need less red tape don't you know the best driver for rents will be the free market. No one should be living in a house outside their means, is it fair that you claim benefits to live in a £300,000 property, by jove of course not. Whiffle, jabber, jibber and awaaauy

jmarin

Next to the borough of Manhattan in New York City London appears manifestly less pricey.  A studio apartment the size of a bedroom usually runs from 2 to 3000 dollars per month and larger size habitations of one bedroom as much as 5000 dollars not counting utility bills. However on the fringes where one finds the other four boroughs one can find good bargains such as Williamsburg in Brooklyn now undergoing intensive  gentrification.  A Tale of Two Cities can mean something is wrong if the guillotine in one hand is more frequent than the other. 

BethPH

I'm unsure how rent controls could be implemented in London. I know they have been in other cities but as another commenter pointed out in my pre-election rent post, it opens the doors to fraud and poor maintenance, so similar to the situation now.

To control the rent of every property would presumably require all rentals to go through state-licenced agencies - in itself not a bad thing as it would ensure tenants are treated equally across the board but there's no incentive for a landlord to let a property if they are forced to accept a rent which doesn't cover their costs, thus reducing the letting stock as they will simply sell up instead.

It's also worth remembering that while there are grasping landlords out there (and there always have been - it's not a recent phenomenon) there are also a great many who do look after their tenants and don't artificially inflate rents or force their tenants to live in squalor. The high rents we see at the moment are a by-product of two things: firstly landlords struggling to cover the costs of property bought in a boom and now in recession and secondly demand from people unable to afford or unwilling to buy.

cityeyrie

There was rent control in London (and the rest of the country) which worked quite well from 1948 to when Thatcher abolished it in the late 1980s, so it is feasible. What she also brought in which is causing the current shortage is the right to buy council flats, which has removed council housing as a real low-cost competitor in the rental market - and laid it open to market speculation. Indeed in the County of London Plan after World War II, the push for more council housing was explicitly planned as a bulwark against exactly the kind of housing speculation in both the sales and rental market, which has gone on in the last 20 years. And people never cottoned on the fact that council tenants already 'owned' their Council house, in the sense of having absolute housing security, and better, the right to move to more suitable accommodation in their neighbourhoods as their lives changed.

Now Cameron's gone and raised the discount again, which will see the disappearance of up to another third of what's remaining. Meanwhile, there are hundreds of flats coming on the market in London every year, all but tied up (and priced way out of bounds for anyone on an average wage) by the influx of money from overseas and domestic elites.

Shelter's campaign doesn't go far enough to solve the current problem. Yes, rent controls and more 'affordable' housing would be a good thing, but further: right to buy should be scrapped for all council and housing association properties, and any current local authority leasehold which is not being lived in by the landlord compulsory purchased back; anyone buying an ex-LA property should have to prove that it is their only property and they intend to live in it; all new-build designated for first-time owner-occupiers and social housing at rents based on actual cost; and a land value tax should be instituted to make sure that whatever is bought does not stand empty or underused.