London renters need 209,000 new homes as government told it has ‘huge task on hands’
Some 209,000 new rental homes will be needed in London by 2031 to help deal with the capital’s shrinking pool of housing.
The data, sourced by estate agent Savills, comes as supply across London has already dropped to around half of what it was five years ago.
Consistent interest rate hikes made by the Bank of England last year in efforts to reduce inflation have damaged the entire ecosystem of the housing sector.
Landlords began either selling their properties to dodge rising mortgage payments – limiting the pool of supply – or passing high costs onto their tenants.
Lodgers also began offering above the asking price to secure a room or flat leading to bidding wars.
Matt Hutchinson, director at flat-sharing website Spareroom, told City PM the government has a “huge task on its hands to make London’s rental market fit for purpose”.
Figures by the portal show that in December some 57,994 people were using the website to find a place to live in London but there were only 13,415 rooms available to rent.
At the end of last year, tenants were handing over £1019 per month to rent a room in a house, up from £949 in the same period the year before.
Hutchinson said that tenants are struggling and landlords are leaving the residential market in alarming numbers.
“The worrying fact is that the current tax system incentivises people to offer short-term holiday lets over residential lets, which is ridiculous.
“We have a housing crisis, not a hotel room crisis. The simplest thing the government could do in the upcoming budget is to level the playing field, to make renting to long-term tenants a more attractive option,” he explained.
Jacqui Daly, director at Savills, said: “London has undoubtedly faced challenges in the last few years with current housing delivery meeting just 41 per cent of housing need.
“Sales to Build to Rent investors have become increasingly important in the capital over the past year and the new supply will help to ease pressure in the rental market”.
It comes as Sadiq Khan accused the government of “regularly intervening to block new buildings in London”, amid an ongoing spat between the London mayor and housing minister, Micheal Gove.
According to a report in the Evening Standard, Gove said he would strip Khan of his planning powers if he did not agree to a house-building audit for the capital.
Gove launched a review which looks at development and discovers where buildings in the capital can be sped up. He also warned the mayor he would intervene where necessary if Khan was not delivering.
The mayor told the Standard last week: “Labour London is outbuilding the rest of the country, and we’re showing up ministers’ dismal failure on council and affordable house building nationally.”
City A.M. has contacted the Department for Levelling Up, Housing and Communities for a comment.