London risks becoming an “ageing city” as Labour hammers landlords with red tape, experts have warned.
Average private rents in London jumped by 9.1pc to £2,243 per month in April, according to the latest figures from the Office for National Statistics (ONS). The typical house price in the capital stands at £556,000, according to the latest UK House Price Index.
Rents have been surging since the pandemic, with a tax raid on landlords and Angela Rayner’s looming Renters’ Rights Billfuelling the problem. Labour’s legislation is set to ban “no fault” evictions and will make it harder to raise rents, prompting many landlords to sell-up.
A slump in the supply of rental properties is fuelling surging rents and experts warned that high housing costs could push young people out of London, potentially undermining the capital’s economy.
“You could have a situation with London where it becomes an ageing city, and the average homeowner age in London keeps going up,” said Stacy Eden of RSM.
“What we’re seeing in London, compared with the other great cities we have – the university towns, Manchester, Liverpool – is a professional population that is declining.”
Mr Eden says more people in their 30s and 40s are moving out of London, partly driven by its high house prices.
He said: “It’s been difficult for first-time buyers to afford a mortgage, so they’re turned to the rental market. That demand has increased, from young professionals who don’t want to move out of London but can’t buy.
“If you’re stuck in between those two stalls, you might start to think about the third option, which is moving out of London. And people are doing that.”
London has traditionally been one of the youngest cities in the country as many young people move to the capital to start their careers. The average age of residents in London was 35 in the last census in 2021, compared to 40 across England as a whole.
A steady stream of workers has helped power London’s economy, which is much more productive than the rest of the economy.
However, the rapid rise in housing costssince the pandemic threatens to bring London in line with the rest of the country and could undermine its economic dynamism.
Tom Bill of Knight Frank agreed that if rents continue to increase, “you may find that the demand shifts outside the M25 a little bit more”.
Mr Bill said: “Where people once might’ve considered renting rather than buying somewhere, as a plan ‘B’ – if plan ‘B’ is no longer necessarily on the table for so many people, then they’ll increasingly look at plan ‘C’, which is Bristol or Manchester.”
Angharad Trueman, president of ARLA Propertymark, which represents property agents, said: “More and more tenants can’t meet the affordability needed for these rental properties. It’s getting to a point where every single month, significant new lets fall through because of affordability and bad credit issues.
“It’s simple supply and demand. Rents are going up because we’re seeing a reduction in landlord numbers. To fix this and stabilise rent for tenants, we need to fix the supply issue.
“We’ve got renters’ rights reform looming, changes to EPCs, tax changes … It’s all adding up to a picture that’s making being a landlord more complicated and less profitable.
“Rents will continue to go up as more landlords leave. Until something’s done to incentivise landlords to keep tenants for the long term and keep their rental properties, this is going to continue to happen.”
Meera Chindooroy of the National Residential Landlords Association said: “Rents across the capital are high because there are not enough homes to meet demand.
“The only way to address this is to develop pro-growth policies… If changes are not made, many more landlords will simply exit the sector, leaving tenants with even less choice about where to live.”
A spokesman for the Ministry for Housing, Communities and Local Government said: “We have inherited a serious housing crisis which has made the dream of homeownership feel like a distant reality for a generation of young people.
“Good landlords have nothing to fear from our Renters’ Rights Bill that will level the playing field between landlords and private tenants by providing the latter with greater security by banning Section 21 ‘No fault’ evictions, empowering tenants to challenge unreasonable rent hikes, and banning unfair bidding wars.”
