London's rents have reached a new high
Following a monthly rise of 0.9% to £1,047, London’s rents have reached a new high for the second month in a row according to the latest figures from LSL Property Services.
Currently, London renters pay an average of £41 extra per month, a 4% increase compared to June 2011 and with rents around 80% higher than the rest of the UK there are claims that London’s renters are being ripped off.
Indeed, the proportion of people renting their homes privately across the UK has grown and is set to expand further, rising to 22% by 2025 with more than a third of households in London renting by this time according to a recent report commissioned by the Resolution Foundation and Shelter from Cambridge University.
‘Tenants complain of numerous problems in the UK rental market, particularly in London where rents are significantly higher than anywhere else in the UK. A big issue in the market is that rising rents have put significant pressure on tenants, with late or unpaid rent in June now standing at 9.2%, an increase from 8.9% in the previous month,’ said James Davis, chief executive officer of lettings company Upad.
The firm’s recent survey on the most pressing issue tenant’s face across Britain with a focus on London found that high deposits and getting them returned was one of the biggest factors with a proportion of tenants made to pay up to and beyond 12 months deposit.
Other issues included property maintenance, pets being allowed into the property and notice periods. However while these issues were also of concern to London tenants, this group also pointed to high rents, not finding suitable homes to live in and having to earn 2.5 times the annual rent as a minimum as problems affecting them.
‘The size of my rent means that I can’t save any money to buy a house. I earn a decent wage, above the average but still have no chance in the next three to five years of saving for a deposit. Another issue is paying for poor quality housing at such a huge expense. In London you can pay extortionate prices for not very much at all. And, if this wasn’t enough, there are a number of lettings agencies who aren’t helping either. They can charge exceptionally high fees and contribute to rising rents by artificially inflating the market,’ one tenant told the survey.
On a national level, the findings revealed that while 73% rented property from a lettings agent 93% were concerned that they were being charged extortionate fees. On a similar note, 79% said that the level of service they received from their agent did not reflect the fees they paid with one disillusioned respondent explaining that they paid £444 for a very slow reference check.
Meanwhile, when asked how much they paid to move into their current property excluding rent and deposit, a number of tenants revealed that they paid up to a whopping £5,000 with 78% stating they had to pay an extra fee on top ranging from £100 to £800.
‘The rental market in London is ridiculous and moving in fees are uncalled for. The company that checked the previous tenant out two weeks before I moved in charged the landlord to move them out then charged me for a new itinerary,’ another survey respondent revealed.
Some 40% of UK respondents said that not all the costs of renting were made clear by their agent. One disheartened tenant explained that they had not been made aware of the imposed check out fee or obligatory cleaning while another described that a further cost to provide tenancy agreements was not mentioned until after the agent had received £250 for an application fee.
If greedy landlords aren't careful, people will move out of London leaving it akin to Ireland.
Or we'll end up with a situation like Monaco (only with drizzle) where only the super-wealthy can afford to live in London and where employment is built around a service industry that caters to the rich. Is this what London is to become? A boring, dull and expensive place but greedy and cheap for all the wrong reasons? Government needs to get a grip and help regulate private rents.
@Puddy – Unlikely to happen. London has a population more than 200 times that of Monaco and as it is the heart of the UK (has roughly 10% of the population) people will not leave.
The most likely situation is that, in the future, there will be more investment into the Private Rented Sector from larger organisations (such as Institutional Investors) looking to achieve long term returns. These investors will be able to drive down costs and offer longer tenancies. Keep an eye on East Village as this will be held up as an example of whether Institutional Investment can work in the UK.
At the moment things are geared towards the Landlords but as attitudes and society changes we will find ourselves shifting towards a more European model of renting where there is more power for the tenant with greater security.