Why Rent In London Is Out Of Control Right Now

We were surprised at how high the

rent

increase was. My roommate and I couldn't afford that increase based on the jobs we have and what we cur

rent

ly earn. We love this area and have lived here for the last six years. We desperately wanted to stay and were more than ready to stay. Rents in London increased by 17% during 2022. This is the largest year-on-year increase the city has seen since 2007. On average, London tenants who work alone spend 48.4% of their income on rent. In 2021, that figure was only 42.7%. Many tenants are fighting their landlords over proposed rent increases or are being forced to move because they can no longer pay the rent on their homes.

By carefully reading the lease with our other tenants in the building, we realized that together we could communicate in a way that would challenge the proposed increase process. There was no way we could afford to heat or eat on that budget, since our rent was probably about 90% of my salary. There are also no rent

control

s in London, meaning landlords have the power to charge as much rent as they think is reasonable and they can charge. In a highly competitive market with more demand than supply for rental properties, this has led to sky-high prices that are unaffordable for many.

Tenants can try to negotiate or say no, but then they run another risk: being evicted. My name is Daniel Lloyd. I am 26 years old and our landlord has proposed increasing our rent by 27%. My name is Dave Chawner. I'm 33 years old and our rent went up 26%. So... how did we get here? And what does all this mean for renters in London? London is a city of about 9 million people spread over about 607 square miles, about twice the size of New York City. From skyscrapers in the city center to family homes in the suburbs, it is a very diverse city and an international hub.

Inner London covers a sort of central part of London, it covers an area of ​​about 20 to 30 minutes travel time by public transport. Covers all international areas. When you go out to the suburbs of London, which is a much more house-dominated market, maybe 35, 40, 50 minutes from the centre, rents fall. So moving to the outskirts of London offers better value for money. And then you have people with higher incomes moving there. The other thing I would also add is that London has seen many improvements in public transport. That is why we have also opened new markets. Good transport links are one of the advantages for Daniel and his flatmate in his house on the outskirts of London.

London is simply the best place to live. There are so many things to do outdoors and indoors. The transport links are fantastic and allow us to get to all sorts of different places, see different people, meet different people. Daniel and his roommate also have to live in London for work reasons. We love the city and the opportunities it offers. As a journalist, I travel a lot to attend motor races. Therefore I need access to London airports. As a writer and comedian, Dave's work also ties him to the city. Unfortunately, I don't have much choice as to where I live, so I have to actually be in the capital.

I love London. It's absolutely incredible. I think it's a beautiful city to live in and to be honest I think it gets better as time goes on. When the pandemic hit, lockdowns meant London suddenly became much less attractive to live in. Restaurants, bars and activities were closed, and working from home meant people no longer had to live in the city to commute to work. So what we saw during the pandemic was a big hit to demand. People were unable to travel to the UK, offices were closed, the economy ground to a halt and the supply of rented homes increased as landlords who normally rent properties to tourists and short-term visitors put those homes on the long-term market.

And so we saw rents drop between 10 and 15%. The market was on the side of the tenants. But as London and the world reopened, the dynamics of the rental market changed and prices soared. In December 2022, the average asking rent for a two-bedroom apartment in London was £2,400, compared to £1,900 before the pandemic. We start 2021 with a huge oversupply of properties. In some parts of London, there was a 50% to 60% increase in properties on the rental market. Therefore, prices were still 20% below 2019 levels. The supply and demand curve had definitely flattened out which then ushered in 2022 which was completely different and demand was high and then Stock levels were drastically reduced.

Daniel lives with his friend in a two-bedroom flat in south-west London. They moved into the apartment in November 2021 and paid a total of £1,400 a month. In October 2022, his landlord proposed increasing his rent by 27% to £1,775. The problem not only affects them, but almost everyone who lives in his building. We understood that some people in some flats were having their rent increased by £100 per person. That prompted us to meet up and collect people's phone numbers, chat as a group on WhatsApp to discuss our rental situations. And it was there that we discovered that people were facing increases of over 25%, some as high as 30%.

Daniel and some of his neighbors also have a clause in their leases that limits how much the rent can be increased and believe the landlord's initial suggestion would violate this. They contacted their property manager to negotiate the increase and received a new offer of £1,750 a month, just £25 less than the originally suggested rent increase. They continued to respond, but heard nothing new from their property manager. We have used the time to obtain legal assistance from other organizations that are involved in tenants'

right

s, so we have an idea of ​​what directions they might go. But ultimately we're just sitting around waiting, nervous to see what they're going to say.

High prices and low supply have led to fierce competition among tenants, who now often feel they have to go to great lengths to get a property. We often don't have to ask tenants to offer more than the asking price. They are simply offering a higher price than requested because they lost the last two or three properties they bid on. They are offering long-term leases and realize they probably won't want to look at them again in a year. I mean, they sent us biographies, they sent us some photos. Applicants who have pets sent us their CVs as if they were pets.

Many people here in London feel overwhelmed by the task of finding a new home. Properties are disappearing from real estate websites in a matter of hours, so people need to react to new listings immediately. Scroll through online property listings. You may find apartments advertised for two people, but with bunk beds or rooms so small that the door doesn't open all the way before hitting the bed frame. These apartments now seem to cost what generously sized spaces cost just a year ago. So supply and demand are really out of balance

right

now. On the supply side, the average London estate agent would normally have had between 17 and 20 rental properties on their books.

That's down to ten or less than ten at this point. Therefore, there is a real shortage of housing for tenants looking to rent. And now the economy is opening up. Tourism has restarted. We also have rising mortgage rates in the UK. The market is driving this, not the real estate agents or the owners, and I think that's probably a misconception. Tenants know they have to spend more than the asking price. We're not necessarily asking them to do that. They are presenting a really good offer because they know that if they don't offer it, they will lose out.

Many of the London tenants, including Dave and his partner, have been forced to move. He has lived in the city for about 11 years and for six of them she lived in his previous flat in south London. Dave and his partner paid £950 a month for the one-bedroom flat. But in July 2022, his landlord proposed increasing the rent by 26% to £1,200. We were surprised at how much the rent was going up. And when we said, "Look, I think it's reasonable for there to be inflation, I think it's reasonable for prices to go up. We'll negotiate at, say, 15%. Is that okay with you?" And they said, "Of course not.

It's a 26% increase or nothing." I think paying a higher rental price is never an option. But also the fact that the owner has so openly shown a disregard for not only our well-being but also our safety and health. There were people doing drugs at our door, there were also people urinating at our door. A gas meter had been installed incorrectly and I believe unsafely. Many of London's tenants still face an uncertain future as pressures on the rental market are not expected to ease. Well, I think we're seeing the worst of the big rent increase we're having.

But I'm afraid I think rents will continue to rise at a reasonably rapid rate, perhaps in the 4% to 5% range, largely because we simply don't have enough supply. We really need to see more on offer in London. Much of that will come from new construction development. My advice would be to act quickly. It is very important that referrals be completed within 24 to 48 hours. It is very important that the contract is signed within 24 to 48 hours. Therefore, I would advise renters to think carefully about what they will be compromising on. They will definitely have to come to a compromise.

After saving for more than a decade, Dave and his partner were able to buy an apartment together on the outskirts of central London. Your monthly mortgage is now lower than the rent increase would have been. We were incredibly lucky to be able to buy somewhere, and I know not everyone is as lucky as us, but the difference is that now, instead of paying rent to pay someone else's mortgage, we are now paying our own mortgage to hopefully that one day, when the year 3000 arrives, we can pay off our own mortgage. Dave is also hopeful that there will be long-term savings as he and his partner will be able to maintain the flat well and make minor repairs themselves.

In the long term, owning our own apartment and being able to nip things in the bud and keep the place as it should be will save us more money. However, buying a property is not an option for most renters in central London, with the average property price being £638,000. Daniel and his roommate are not sure if they can stay in their current house, so they have been looking for apartment rental ads. It is true that it is difficult to find a two-double bedroom apartment in London because space is at a premium. However, we have found some things a little further.

We would lose many of the transport links we have to central London. Paying the higher rent would be impossible for Daniel and his roommate. The only other options would be to return to our parents' houses. But we are 26-year-old professionals. It wouldn't be fair for our parents to do that. So we are determined to stay in our current property, fight the landlord and file our claim and get a level of increase that is acceptable and not at the high levels they have been proposing to various people in the building. .