Private renters squeezed and London housing market ‘stalled’, new figures show

Private renters squeezed and London housing market ‘stalled’, new figures show

The average proportion of Londoners’ income devoured by private sector rents rose to 31.5 per cent in the final quarter of 2018, the highest level for four years, according to figures published by think tank Centre for London.

At the same time, the number of planning permissions for new homes and the number on which building has started is falling as house price growth and sales have slowed, threatening the overall supply of new dwellings.

Silviya Barrett, research manager at Centre for London, said, “London is displaying a number of worrying trends,” stressing the difficulty of getting by when nearly a third of your income goes on housing costs and the urgent need for local authorities and and housing associations to “take up the slack in building the homes London needs”.

Drawing on Office for National Statistics prices data, the think tank says in its latest London Intelligence bulletin that, “In November, after six months of declining rents, year-on-year prices in the capital remained static,” but that figures from property market intelligence company Dataloft, based on reports from around 15 per cent of transactions, “indicate that London rents actually increased in Q4 of 2018”.

The largest increase found was in rents for terraced houses, up by 4.7 per cent in the year to December 2018, while that for single bed flats was a more modest 1.8 per cent. Centre For London also reports that the average age of London private sector tenants has fallen to 32 compared with 34 in 2015, with more than half under the age of 29. Continuing wage stagnation is adding to the squeeze on renters. However, a reduction in non-UK EU nationals coming to live in London since the EU referendum, lessening demand in the private renting sector, might have meant rent rises have been lower than previously expected

The housing trends are brighter for first-time buyers, whose number increased to reach its highest level since 2015 helped by average house prices rising by less than one per cent. However, the volume of buying and selling of homes overall in the capital fell by a striking 18 per cent in the year to October 2018. Barrett attributes this to, “Brexit uncertainty, existing homeowners staying put and a lack of confidence among house buyers”.

London Mayor Sadiq Khan announced yesterday that he has asked his deputy for housing James Murray and Westminster North MP Karen Buck, a specialist on housing issues, to develop proposals for “stabilising or controlling private rents in the capital”, although for these to be implemented would almost certainly require a change in national law.

City Hall also said that any such policy introduced would also have to protect “new supply and investment”. A 2015 report for the London Assembly housing committee by the Cambridge Centre for Housing and Planning Research modelled six different rent stabilisation scenarios, which broadly found that a range of moderate measures to hold down rents would reduce the rate of rent increase and the supply of new rental homes by small amounts.

 

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