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London rents rising amid shortage of properties

Rent prices in London are forecast to see strong growth following a significant drop in the number of homes available to rent in the capital, new figures show.

Fresh data from Home.co.uk reveals that the number of available properties to rent is plummeting at an alarming rate, particularly in Greater London, and this is placing upward pressure on rents.

Rents have already risen by 4% in the Greater London area over the last 12 months, according to the property website, with further growth anticipated as a result of the widening supply-demand imbalance in the private rental market in the capital.


Home.co.uk reports that there has been a 24% reduction in the number of available homes to rent in Greater London that have been on the market for 20 weeks or less, from 52,388 in August 2017 to 39,746 in August this year, owed largely to a jump in the number of buy-to-let landlords exiting the PRS, due to the government’s draconian tax changes.

The existing number of properties available to let is at its lowest level for three and a half years.

“The main driver for rent hikes going forward is an alarming lack of homes to rent, especially in Greater London,” said Home.co.uk director Doug Shephard. “24% is a huge drop and much of it can be ascribed to the BTL exodus.”

Another major factor deterring buy-to-let landlords is the fact London is one of the worst areas across Britain for buy-to-let yields, with an average yield of just 3.7% recorded in August in the capital compared to 4.7% across mainland UK.

Shepherd added: “Basic economics tells us that when supply falls prices must rise. In the case of London, it looks like rents will increase quickly – and they need to.

“For too long, rents have lagged behind house price inflation, to the point where yields have sunk too low. Rental returns fundamentally underpin property values and London prices desperately need a fillip to prevent the slide into negative equity.

“Watch the rents. It’s catch-up time.”

Another intervention has been increased red tape for landlords due to additional licensing for Homes of Multiple Occupancy (HMOs), whereby councils can impose their own licensing on HMOs.

Across mainland UK, the supply of all available properties to rent, including hard to rent properties that have been on the market for more than 20 weeks, has dropped by more than 10,000 since July 2017, from 233,453 to 223,115.

Aside from London, another particularly badly hit area is the South East, where supply of all available rental properties fell from 30,066 in August 2017 to 27,728 in the same month this year.

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Poll: Are rent rises inevitable in London and beyond as more tenants chase fewer homes to rent?


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    certainly more tenants than properties here in east anglia, don't know about any where else

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    Took three months to rent out an apartment in Chepstow and had to drop the price twice.
    Location, location, location.
    I don't think that we will see strong growth in the rental market here as I have mentioned before, it is geared to price and affordability in our region and doesn't seem to have a great deal to do with supply and demand.

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    Even in areas of low availability where rents may indeed rise, it doesn’t necessarily mean sitting tenants will pay from month to month.

    One also has to consider affordability and with tenants protected at least for a short period of time it’s possible more may choose/be forced into defaults.

    Economic models of supply and demand, equilibrium etc etc work until they don’t and location equally plays a part into the equation.

    Many tenants don’t want to purchase it’s true but, neither are they willing to swallow over exaggerated rents, wanting the best of both worlds is human nature.

    We are very watchful currently with our small portfolio and happy to be on the sidelines.


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