London’s rental market has become a ‘nightmare’. Here’s why


London
CNN business

The past few weeks have been a “nightmare” for Rebeca Blázquez.

The 22-year-old university graduate, who lives in Madrid but was hoping to find work in London before starting her master’s degree, spent a month looking online for a room to rent in London with a budget of £900 ($1,070). She sent dozens of messages to landlords and evicting tenants and logged in Virtual tours only to find the space was already taken.

“I think I’ve sent over 100 messages to various ads and I’ve only had [a] Answer 30 messages,” she told CNN Business.

Renters, real estate agents and property search Specialists described a frantic scramble to CNN Business rental units since the spring, students and workers have been streaming back in droves city after the pandemic.

This surge in demand collided with a steep rise supply drop. Data from Rightmove, an online property portal, shows that the number of available rental apartments in London fell by almost a quarter between July and September compared to the same period in 2021. Prices have risen to all-time highs as a result.

The average monthly rent, including bills, for a room in a shared house or apartment was £933 ($1,109). up 17% in October from before the pandemic, according to data from SpareRoom, the nation’s largest roommate search site.

Blázquez said the apartment hunt this fall was a far cry from her experience in September 2020, when she last rented in the city. She settled on an apartment earlier this month but is paying almost £300 ($357) more for a similarly sized room in a less desirable location.

“I rented it without seeing a video or anything because I was so desperate,” she said.

Matt Hutchinson, director of communications at SpareRoom, told CNN Business that the capital has seen a “huge influx” of students, young people and expatriate workers in recent months — demanding the pandemic be kept bottled.

At its peak in September, almost nine people searched for every room listed on the website.

“We’ve never seen the market as it is now,” Hutchinson said.

Even though support financially down slightly since September, it’s still above the average summer high when the market is typically at its busiest.

“If someone has listed a room in the past few months, they’re likely to get hundreds of responses,” Hutchinson said. “It’s a struggle to even get an answer or get an agent to see you,” he added.

Renters across the UK must go to exceptional lengths to secure a room.

In a SpareRoom survey of UK renters in September, a fifth said they would end up paying several monthly rents in advance, while another fifth said they had to bid over the asking price to secure the room.

Almost half said they had to decide whether to take the room during a viewing.

Greg McLoughlin told CNN Business that when he began his “exhausting” six-week search for a room in early October, he was often asked to post a deposit equal to eight weeks’ rent – double the usual four weeks.

McLoughlin, who works for a cryptocurrency exchange said he “rarely got messages back” on SpareRoom even though he paid a £11 ($13) weekly subscription so he could respond to ads within seven days of publication.

He eventually snagged a room in a five bedroom house in south London for £950 ($1,130), although the landlord has warned rents are likely to rise. Still, he’s relieved.

“Everyone is super nervous looking for a place to stay,” McLoughlin said. “You can’t hesitate in this market,” he added.

The problem is simple. There are too many tenants looking for too few available apartments.

Jeremy Leaf, Founder of Jeremy Leaf & Co, a north London property agency, told CNN Business that the number of properties advertised on its website has fallen by up to 40% compared to November last year.

Landlords have left the rental market as it becomes less and less profitable.

Since 2016, the UK government has increased taxes on the purchase of second homes and Reduce the amount of tax landlords can reclaim on their mortgage payments.

Many landlords also fear that an eviction will soon be very difficult difficult tenants – including those who could be behind on their rent, have caused damage or abused their roommates — if the government passes bills banning evictions without fault, Leaf said. Landlords can evict tenants through another process, but this often takes much longer and may involve a court hearing. Parliament is expected to vote on the new law before the end of the year.

Add to this rising inflationand renting property isn’t as lucrative as it used to be.

“Just the cost of getting people to renovate homes, the cost of materials has gone through the roof,” said SpareRoom’s Hutchinson. “Increasingly, landlords are exiting the market because they just can’t afford it,” he added.

Some landlords have even decided to sell to take advantage of an uptrend property prices That year, Amelia Greene, director of real estate agency Savills, told CNN Business. According to Rightmove, the average asking price in the capital is up 5% so far this year.

The supply crunch this year will be exacerbated, according to the Leaf, with more tenants choosing to stay and renew their current leases for a smaller rent increase than they would receive elsewhere.

A sharp increase in mortgage rates also retains aspiring first-time buyers in the rental market, further reducing the amount of inventory available.

Rental prices in London can have somewhat cooled since their “rather unprecedented” increases during the summer, Leaf said, but the city’s chronic shortage of supplies means more hikes are on the way.

“Upward pressure on rents will increase,” he said.

The average monthly rent for a two-bedroom apartment was £2,226 ($2,646) last month, data from Rightmove shows. That’s 19% more than in February 2020, before the pandemic prompted a brain drain from the capital.

Savills expects the average London rent – across all property types – to rise by a further 5.5% over the next year.

who are pay less have to make big compromises.

Sally Vince, the who works in commercial real estate, told CNN Business that after a “very stressful” time looking for her £700 ($832) room this summer, she took what she could get.

“[I] I pay less rent, but I’ve had to make a lot of compromises with the number of people I live with…the amenities available and just the overall condition of the apartment,” she said.

Vince compares her search to her previous apartment search in 2019. Back then, about half of the people who advertised rooms responded to her requests, but this year she only got three responses out of the 50 requests she sent out.

“I’ve got a steady job now, I know how it works and I know a lot of people in London, but this time it was much, much more difficult,” she said.

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