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London Property Rentals Become Unaffordable for Families

house price statistics
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Toby France
Short-let expert, Toby has managed thousands of holiday lets in London and across the UK and has boosted their profitability on booking platforms like Airbnb and Booking.com. Co-founder of HelloGuest, Toby has more than a decade's worth of experience in the industry.

How The Long-Term Rental Market Has Changed

Rents will be unaffordable in the next decade.

A report suggests that the inadequate supply of housing property to meet the growing demand will affect property rental, as property prices are predicted to become unaffordable for customers over the next decade.

The report forecasts that average rents are expected to rise by 52%, exceeding £2,000 a month by mid-2024 and far outstripping pay increases. As a result of this rise, many families will be forced to claim housing benefits to avoid eviction.

“Rents of mainstream rental properties in London are forecast to continue to increase between 2024 and 2028. Rental growth is expected to be the strongest in 2024, at 5.5%. On the other hand, house prices are expected to grow at a slower rate.” Statista.

London house prices will become more expensive in the next five years, leading to a further reduction in home ownership (40% mark by 2028, the lowest level for a quarter of a century).

Recent figures from the property website Zoopla showed that property prices in London rose 7.3% over the past year to an average of £444,393, more than twice the pace of any other area.

Kate Dodsworth, the London assistant director for the National Housing Federation, which published the study, said, “We have reached the point of absolute crisis — the supply of new housing is not keeping up with demand in London. This is not a time for a short-term response, the Government has to look beyond 10 years if we are going to have a chance of sorting this out.”

The Federation disclosed that rents rose faster than wages last year in 28 of London’s 33 local authority areas. The most significant “affordability gap” was in Hammersmith & Fulham, where average monthly rents increased 15% to £1,677, while average income dropped by 1%. Merton, Barnet, Richmond and Enfield were other boroughs that recorded double-digit rent increases.

Shortage of long-term rental property in London

Apart from immigration and more people moving back into London post covid, Government rule changes on Airbnb-style rentals could lead to the loss of more than 20,000 long-term rentable properties.

A loophole in government proposals to significantly reduce the number of ‘Airbnb-style holiday lets’ in the capital could lead to the loss of thousands of long-term rental properties. The UK government is to allow London landlords a “permitted development right” to change their properties into holiday accommodation without planning permission.

Why should this matter

The main driver is income. Holiday rental income far exceeds tenant rents, and holiday lets are very lucrative. The owner of a one-bed studio in Chelsea can charge £1117 per week to tourists but only £ 277 to longer-term tenants.

Whilst holiday lets mean more property management, with the right agent like Hello Guest, the positives far outweigh any headaches. Explore the features of our management service and what’s included in our 12% commission structure.

Over 57,000 London landlords have already made the switch. More.

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