As a young professional looking to move out of the family home and rent with friends in central London, I knew the road ahead was never going to be easy when it came to flat hunting. Prior to beginning our search, I had reconciled myself to the fact that it wouldn’t be a quick process and we would likely have to make compromises and adjust our expectations along the way. However, I found the realities of London’s rental market startling.
To begin with, the process of seeking private rental property in the capital is incredibly time-consuming. My would-be housemates and I will spend hours each week, on top of our full-time jobs, registering and following up with estate agents to hear about any properties that are coming onto the market. This is to say nothing of the time spent travelling to and attending viewings during lunch breaks or after work.
Once a property does come onto the market, the competitive nature of the flat-hunting process is laid bare, and things start to move quickly. As a would-be tenant, you are often relying on a call or email from an estate agent to inform you that a new rental property that matches your criteria has become available and is available for viewing, unless you are proactive and fortunate enough to have followed up with them at such a time that one does and is.
Sometimes you’ll get sent a comprehensive outline of the property complete with photos and a floorplan sent to you to inform your decision about whether to view it. Other times, all you’ll get from an estate agent is an address and the listed price – the demand for private rental properties is such that some estate agents don’t bother taking photos or uploading property specifications to their website in the knowledge that properties can come and go within hours.
Viewings for a property (if they even take place) then throw up some ludicrous situations. It is not uncommon to show up for a viewing to find a queue of people waiting to view the same property as you. While some estate agents will give you the time and space to examine the property one at a time, others will squeeze all prospective tenants into a property at once, which isn’t awkward at all.
If you like what you’ve seen, the next stage of the process typically goes one of two ways.
Some landlords will operate on a first come first served basis, letting their property to whoever makes an offer first, which is why it can be important to view a property as early as possible.
However, more likely than not, landlords will let the offering process descend into a bidding war in terms of prices and a race to the bottom in terms of conditions among would-be tenants. Despite already exorbitant rental prices, people will offer a few hundred over asking price and money upfront, then commit to other conditions like signing the lease for three-years with no break clause, all to sweeten the deal in the eyes of the landlord.
All this will come as no surprise to any young professionals who have been flat hunting in the capital recently, but how did we get to this point?
London’s housing crisis is not new, and demand has long outstripped supply when it comes to private rental properties. Data from real estate firm Chestertons reveals that the number of rental properties in London plummeted between July 2021 and July 2022 by 38 per cent, yet the number of tenant enquiries over the same period shot up by 60 per cent.
Consequently, rental prices have soared, even for the most mediocre of properties. In London, official figures show that prices increased by 2.5 per cent in the 12-months to August, up from 2.1 per cent in the 12-months to July. This represents the largest annual growth rate the Office for National Statistics (ONS) has recorded since it began tracking rental costs in 2016.
While the failure to build enough affordable homes is arguably the root cause of the housing crisis that besets London, the situation has been compounded in the rental market by the growing number of buy-to-let landlords who are selling up.
Indeed, a recent market report by Propertymark, a membership body for estate agents, found that between 2019 and 2022, some 94% of landlords who removed their homes from the market did so to sell the property.
The mass exodus of landlords can be predominantly put down to changes in rules and regulations, which have reduced the appeal of buy-to-let investments. This can be traced back to the introduction of the 3 per cent stamp duty surcharge in 2016, which increased the cost of buy-to-let and second homes.
In addition, while designed to protect tenants, 2018 changes to Houses in Multiple Occupation (HMO) regulations, which require landlords to obtain a licence for all properties occupied by five or more people who are not members of one family, have reduced the appeal in the eyes of landlords of acquiring and leasing these types of properties.
Indeed, according to official figures, following the introduction of these regulations, the level of total HMOs declined by 13 per cent between 2019 and 2021 – the biggest reduction of all regions in England – with the steepest drops coming in Ealing (-59 per cent) and Lambeth (-58 per cent).
More recently, the Renters Reform Bill has proposed big changes to the private rental sector that seek to improve the conditions for and rights of tenants through measures such as banning Section 21 ‘no fault’ evictions and increasing the standards that tenants can expect from their landlords.
Although the future of the Renters Reform Bill remains in doubt following the resignation of the architect of the bill, housing minister Eddie Hughes, and the advent of a new prime minister, a third of UK landlords believe that rental reforms are currently the greatest threat to the market, with one in five planning to sell up as a result, according to a survey by Simply Business.
The process of seeking private rental property can often pitch tenants against landlords, with the former railing against the latter over extortionate rent demands. However, landlords evidently face their own dilemmas in the private rented sector amid economic turmoil and regulatory changes. Indeed, the concerns of both expose a problem at the heart of the issue: the dual role of housing as a basic necessity and an investment. One thing that is likely to unite both though is a certain pessimism about the future of the rental market and doubt about any lasting solution to the problems that beset it coming any time soon.