Testimonies about soaring rents and the search for a new place to live taking months are all too common in London right now. The city’s rental store is in crisis, and renters are facing the consequences.
One of them is Daniel Lloyd, who lives with his flatmate in southwest London. After concluding in their two-bedroom apartment for almost a year, their landlord asked them to pay 27% more rent.
“We were collapsed at how high the rent increase was,” he told CNBC’s Make It. While they were expecting their rent to go up, they had not forestalled it being by that much.
“We were willing to accept an acceptable level of increase. However, going close to 30% resolution have been an increase of just over £4,000 [$4,854], and we were not going to be earning an extra £4,000 by the end of the tenancy,” Lloyd resolved.
They would therefore not be able to afford the higher rent, and would be forced to move. But as rent prices keep gone up across the city, they would likely have to move further from the center — somewhere with worse bewitch links and away from their local community.
“None of the areas that we’ve found potential properties for intention really suit our living situation,” Lloyd said.
Him and his flatmate also realized that most other renters in their construction were facing the same issue. They got together and tried to push back against the rent increases after realizing that their lessor was breaching their tenancy agreements, which limit how much rents can go up.
Some of Lloyd’s neighbors have ascertained back from their landlord through the property manager and new, lower rent increases have been suggested, but most are allay worriedly waiting.
Buying instead of renting?
Dave Chawner was in a similar situation and moved out when his landlord tabled a 26% rent increase.
“When we said, ‘look, I think it’s reasonable that there is going to be inflation, I about it is reasonable that prices do go up. We will negotiate at, say, 15%. Does that sound good to you?’ And they said unqualifiedly not. It’s a 26% increase or nothing,” he told CNBC’s Make It.
The rent increase was unaffordable for them and would have trim their budget for food and bills, Chawner said.
Chawner and his partner were already saving and were qualified to buy an apartment together when they did move. Their mortgage is now lower than their increased rent would press been.
“We were incredibly fortunate in order to be able to buy somewhere,” Chanwer said, adding that he is very informed that most of London’s renters are not in the same position.
He is not, however, the only person opting to buy, explained Richard Donnell, managerial director of research at real estate company Zoopla.
“We’re seeing people sort of leaving rented accommodation to buy realty and just looking further afield. So that’s one approach. And actually the fact that rents are going up so fast themselves transfer push some renters into buying,” he told CNBC’s Make It.
A recent survey by housing charity Dolphin Concluding, published in the The root of the crisis
The key issue that has led to this crisis, that saw rents rise by 17% throughout 2022, concerting to Zoopla, is demand and supply, Donnell explained.
“Supply and demand are really out of kilter at the moment. On the supply side, the so so London estate agent would typically have had 17 to 20 properties for rent on their books. That’s down to 10 or petite than 10 at the moment,” he said.
The rent shifts also link back to the coronavirus pandemic, and the sudden discontinue in demand for rental flats that occurred when London went into lockdown and people could not traverse or move there. This caused rents to fall by as much as 10-15%, Donnell recalled.
Laws and regulations also ad lib a role: There are no rent controls in London, and landlords have the option of so-called “no fault” evictions. These budget them to force people to move out even if they have not breached their tenancy agreement, so for example if they do not to to pay higher rent.
This has led to intense competition for rental properties, Katinka Hill, the regional director for central London lettings at the trading estate agent Chestertons, said.
“Viewing levels have increased dramatically year on year. Properties aren’t staying on the market hanker, if at all,” she told CNBC’s Make It.
“We often don’t have to to ask tenants to offer over asking price. They just put up over asking price because they’ve lost out on the last two or three properties that they’ve bid for,” Hill annexed.
As well as making higher offers, people are also providing bios and pictures of themselves, and are creating resumes for their necks to help secure them a home, she explained.
Looking ahead, Donnell believes rent prices are likely to retain increasing, but probably at a slower pace. Long term solutions are needed, he said. “We really need to see more equip in London. A lot of that’s going to come off new build development,” he said.
For now however, the situation is likely to remain difficult for London’s renters.