With the triple-threat of Brexit, coronavirus, and unprecedented rental demand, it’s not hard to see that the Central London rental market is going through a tumultuous period.
This blog post provides a rundown of the current state of the London rental market, along with signs we might be due for a shake-up, and what such a shake-up could look like.
After reading, you’ll have a clearer picture of the rental situation, and the wider impact on people looking to live in London apartments.
The current state of the London rental market
Google “London rental market” and the prognosis doesn’t look particularly good. Here are the top three headlines, for example -
- “Second U.K. Lockdown Could Wound Already Ailing London Rental Market.”
- “Private rents in London plunge by up to 34% amid Covid crisis.”
- “Rents in British cities fall by up to 15% amid Covid 'exodus’.”
If you’re planning to move to the city, such headlines may give you pause. Is it a safe time to move? Are you at risk of getting caught out? Let’s take a closer look.
Rental prices aren’t following national trends
According to Rightmove, the average UK national rent (excluding London) was £964 per month in Q3 2020, up 1.6% from Q2's £949. Compare that with Greater London, and Q2 to Q3 saw a 2.2% decrease, from £2,011 to £1966. When looking only at Inner London boroughs, the picture is even more stark: a 4.2% decrease.
For renters, such decreases might signal a good time to move. You’ll be paying under the odds, after all. For London landlords, however, misalignment between national and London trends means less income and more volatility.
More and more buildings are empty
Despite this, more buildings in the city are empty. Whether it’s existing buildings with dwindling occupancy or new build-to-rent developments that haven’t managed to attract occupants at all, the amount of empty property in London is rising.
There were over 25,000 empty properties in London in January, and early this December Southwark reported that one in 25 homes were empty - the highest ratio in a London borough. Combined with an increasing amount of people being made homeless by circumstances beyond their control, it’s not hard to see how this could lead to a shake-up.
Signs we might be due for a shake-up
Looking at the London rental prices trend raises the question of whether we’re due for a shake-up. Back that up with some statistics from the London Housing Strategy 2020 report, and the question becomes even more pertinent.
Let’s take a look at some of those statistics -
- Between 1997 and 2019 London's population grew by 28%, but the housing stock only increased by 19%. This means that the ratio of available housing per person has dropped.
- Between 2002 and 2020, the trend has been for 20-somethings to move into London, and for 30-64-year-olds to move out. This means an influx of people who are, on average, less financially solvent.
- There is an enormous disparity in London, with 20% of households in the poorest fifth of the country, and 33% in the highest. This translates to uneven demand.
- In 2018, 65% of people supported more housing being built in their area, up from 34% in 2010. This indicates more goodwill toward new housing, which is positive.
- The number of people per dwelling has been steadily increasing since 1990, with a small drop between 2019-2020 (but nowhere close to 1990 levels). This hints at the common phenomenon of house-shares in our capital.
With all of these factors, it’s not hard to imagine a shake-up could be coming. Another important question, though, is “what might a shake-up look like?”
The ‘unaffordability index’, which shows how the average Londoner’s rent and earnings intersect and indicates what they can afford to rent, has actually been decreasing since 2016, meaning that rents are, on average, more affordable.
However, for people on the ground, reality often feels quite different.
One avenue for a “shake-up” would the introduction of rent controls, which Mayor Sadiq Khan has advocated. Such a scheme would see caps placed on rent increases within and between tenancies, meaning that landlords would be unable to jack up prices on a whim. Rate increases would be allowed within a limit set by the government, leading to fairer and more predictable costs for tenants.
Many countries - from Canada to Germany - offer such schemes already, although political will in the UK is lacking.
This brings us to the most salient point, however. Realistically, a “shake-up” isn’t likely. Instead, we’ll most likely see a gradual shift in priorities between renters and landlords, and this will work its way slowly up to policy-makers.
The London Housing Strategy, for example, monitors 11 indicators, ranging from reducing homelessness, reducing overcrowding, to making housing more affordable. Each of these indicators is attached to specific programs, and the debate around each is influenced by government, renters advocacy groups, landlords, and more.
We expect to see the London rental market continue to evolve and morph in response to these competing pressures, priorities, and outside factors. If you’re expecting a shake-up where everything changes overnight, that’s probably not going to happen.
Slow and steady
At Dolphin Square, we pride ourselves on fair and respectful pricing. Our apartments are priced competitively, whether for short- or long-term lettings.
By offering a wealth of different apartment types we are able to cater for a variety of budgets. Our portfolio includes studio apartments as well as one-, two- and three-bedrooms. Each is tailored to the needs of a different group, with studios ideal for young professionals, three-beds ideal for large families, and everything in between.
Take a look at our apartments for rent in London. We’d love to welcome you and to give you a fairly priced, attractive, and comfortable place to live.