Councils claim only 5% of rental homes are affordable 

New research claims that just 5% of private rental listings in London are affordable to low-income households using Local Housing Allowance to pay their rent.

The study also provides robust evidence that London’s private rented sector has shrunk in size, with Londoners finding it increasingly difficult to secure PRS housing.

The analysis found that up until April 2021 London’s PRS continued to grow. However, from April 2021 to December 2023, 45,000 rental properties were sold in the capital without being replaced. This accounts for 4.3% of London’s privately rented homes, with the lower-cost (i.e. more affordable) end of the market particularly affected.

The analysis was undertaken by high end agency Savills and commissioned by London Councils and Trust for London. I

Key points from the analysis include:

• The availability of listings affordable to households relying on LHA to cover their rent gradually reduced throughout 2023-24 for all property sizes. Despite the government raising LHA in April 2024 to cover the lowest 30% of local market rents, the research shows that by July-September 2024 only 5% of London listings were affordable on LHA. This is because the LHA uplift in April used rental data from September 2023 and in the context of rapidly rising rents these rates quickly fell out of step with market conditions;

• Landlords selling rental stock to owner occupiers has increased sharply. From April 2021 to December 2023 45,000 rental properties were sold without replacement. This accounts for 4.3% of London’s privately rented homes. Homes sold by landlords to owner occupiers are worth £410,000 each on average across the capital;

• Properties are leaving the rental market at a much faster rate in the most affordable locations to rent. During 2023, PRS stock across the lower end of the market reduced by 3.3% per month as a proportion of available listings compared to 2.6% per month across the rest of London. The loss of properties at the lower end of the market has a particular impact on the ability of low-income households to access the PRS and makes it harder for boroughs to prevent and relieve homelessness, including through using PRS properties as temporary accommodation.

London is home to an estimated 2.7m private renters (around 30% of the capital’s population). Over 400,000 private renters in London – approximately one in seven – rely on LHA to cover their housing costs, meaning that access to affordable privately rented accommodation is a key issue for low-income Londoners.

A London Councils spokesperson says: “These stark figures are the latest evidence of the massive pressures faced by low-income private renters in the capital.

“London’s homelessness emergency is fundamentally driven by the chronic shortage of affordable housing. There are 2.7 million people relying on privately rented housing in the capital. The falling number of privately rented homes and worsening shortage of affordable accommodation are an urgent challenge for Londoners and London boroughs.

“Further action at a national policy level can help us turn the situation around and we are committed to working closely with the government on this important agenda. Interventions such as increasing Local Housing Allowance rates to keep pace with rent rises would help prevent homelessness and save public money in the long run.”

This article is taken from Landlord Today