London landlords may soon be unable to charge higher rents as the capital’s chronic housing shortage begins to ease.
The rise in housing stock came after rising rents and a sluggish sales market prompted landlords to return to the space. The number of rentals available in central London has jumped 60% since the start of the year, 24% more than was available before the pandemic, according to data from Chestertons estate agents.
However, it is still down 40% from August 2021 and competition for rentals remains fierce, but experts said the supply crisis is ending. Katinka Hill, from Chestertons, said: “The London market is spinning. There are definitely more homes advertised and rents will stabilize by the end of this year.
“Accidental owners put their properties up for rent instead of selling them. Additionally, the rising cost of living has convinced couples who each own property to move in together and rent out the other for extra income.
Greg Tsuman, of Martyn Gerrard estate agents, said the number of listings from his office had tripled in six weeks, although the rush has since slowed. He added: “What is happening in central London is an advance warning for the rest of London.”
London landlords have been hit hard during the pandemic, when the shift to working from home and online university courses sparked an exodus from the city centre. Investors who relied on tourists and marketed properties as vacation rentals also turned to the long-term rental market after travel bans destroyed their incomes, increasing competition among landlords. Many suffered long empty periods or were forced to reduce rents by 30% to attract tenants.
However, the market turned last summer as lockdown restrictions eased and tourists, students, corporate movers and office workers all returned at once. This has been met with a growing number of owners deciding to sell to avoid draconian green improvement rules and less favorable tax benefits.
In July, rents in London’s most expensive postcodes soared 25.8% to 14.6% above the pre-pandemic average, according to LonRes, a data agency.