The cost of renting in London and many other parts of the country has soared over the past year, with a lack of available properties meaning tenants face tough competition to secure a home. Some feel they have little option but to pay thousands of pounds upfront – £50,000 isn’t unusual – or sign longer leases to beat other hopeful applicants.
According to the latest figures from the property website Zoopla, average rents in London have hit £1,978 a month – up 15.2% over the last 12 months – while Rightmove said annual rent inflation in the capital was running at 15.7%.
Tenants are grappling with sizeable rent increases during a cost of living crisis that has also led to energy bills, supermarket prices and a range of other costs rocketing.
I spent a few hours with staff at a branch of the letting agent Chestertons in Little Venice, west London, to see how the turbulent market is affecting tenants, landlords and agents on the ground.
The office also covers Paddington and Maida Vale, as well as the slightly more affordable areas of Queen’s Park and Kilburn. Its agents mainly cater to families and couples, and individual landlords rather than investment firms.
Little Venice itself is an affluent residential neighbourhood in the City of Westminster, with mansion blocks lining the Grand Union and Regent’s canals that give the area its name.
The pressures facing renters vary across London’s 32 boroughs but the visit offered a snapshot of the main problems facing many, no matter where they live: high demand and low supply.
Chestertons Little Venice had 26 properties advertised to let online and available at the time of writing. It is fair to say that, if you ignored the “let agreed” properties, available one-bedroom flats, which have recently experienced a resurgence in popularity, were in short supply: for example, there was one in Little Venice for £2,167 a month, and one in Maida Vale for £2,383 a month, plus a couple that were much more pricey, including a short-let flat in Maida Vale for £7,367 a month.
Agents spend each morning making calls to follow up the flood of inquiries received overnight. Speed is of the essence in such a competitive lettings market, and Lucy Hayes, the branch’s lettings manager, is aware of the anxiety involved in moving home at the moment.
Tenants are only moving if they really have to, she says – for example, if their current landlord is selling up or has hiked the rent. This means there is an added time pressure and stress involved in the search.
I joined an agent showing a potential tenant around a two-bed ground-floor flat. The mansion block property, with access to a shared communal garden, was on the market for £2,800 a month.
The viewer was one half of a couple who have lived in several properties in the area and are hoping to stay local.
The couple are comfortable in their current flat and don’t want to move but are being forced to leave because the landlord needs the property back.
Pre-pandemic, it was not unusual for properties to be on the market for a couple of weeks before a tenant was found. Now, flats are snapped up within 48 hours of being advertised, often after a competitive bidding process among several hopeful renters.
Hayes says the market is starting to calm down after the chaos of the immediate post-Covid rush in 2022, when many returned to the city.
“So many people came back to London, the demand last year was pretty insane,” she says. “It was quite a stressful environment, to be honest; trying to manage expectations of tenants and landlords and still making sure we were giving them a good experience.
“There was definitely high demand and not enough properties on the market – demand was higher than pre-pandemic. The disparity between supply and demand was so stretched, it intensified everything.”
However, she adds: “We are definitely starting to see a slight change in that now. We’re starting to see more of a rebalance. There are more properties coming back to the market because of the way sales are at the moment, with landlords choosing not to sell.
“It’s not 100% [back to normal] yet – there’s still definitely high demand and there are still unfortunately not enough properties – but we are doing everything we can.”
Last year there were about seven applicants a property in Little Venice, and that has now fallen to about three on average. However, that still means flats are getting snapped up fast and renters are competing to make their offers as appealing as possible.
The situation varies across London boroughs but the overall trend is that demand is far outstripping supply, pushing prices up.
Renters desperate to secure a home are willing to pay more than the asking price, offering months of rent upfront as a lump sum and signing longer tenancy agreements to make their applications more appealing.
It seems everyone renting in the capital has a story about rising rents and bidding for properties.
Two friends, both professionals, were told they should offer above the £1,750-a-month asking price to give them a better chance of securing a two-bed flat in south-east London despite already offering to pay five months’ rent upfront.
Meanwhile, one couple have left London temporarily after the landlord increased the cost of their £1,500-a-month two-bed flat in Dalston, east London. It went back on the market at £2,100 a month.
Another family offered to pay one year’s rent upfront as well as a deposit – amounting to more than £50,000 in total. The let was agreed but they were turned away after a credit check highlighted an old unpaid bill despite the offer to pay a full-year’s rent. They secured a different three-bed flat in Wandsworth, south London, again agreeing to pay £50,000 upfront.
These examples are anecdotal and not related to Chestertons but Hayes says tenants are asking for advice on how to make their offers stand out.
“Tenants are coming to us and asking: ‘How can I make my offer really fantastic?’ If there’s more than one offer, the tenant doesn’t know the other offer, so they go in slightly blind,” she says.
“We advise on what they can do to make their offer better, and then let them make the decision. We always say: ‘You have to do what you’re comfortable with.’
“It can come down to the terms of the offer, especially the longevity [of the tenancy]. A lot of landlords like that because they don’t want to be doing this every year, so we advise that longevity is really important to our landlords.”
She adds: “It is really important we give the tenants as much knowledge and advice as possible.
“We can’t control how competitive the market is, and I wish it would mellow out, because to call an applicant and say ‘sorry, you weren’t successful’ is a really horrible conversation to have.”
‘The rental market is likely to continue to be very competitive’
Average private rents rose in every region of the UK last month, and demand for properties remains “exceptionally high”, according to data this week.
The research from HomeLet found that the average rent in the UK was £1,184 a calendar month in March – up from £1,175 in February.
The figure for London nudged up to £1,979, which is up sharply on the figure of £1,586 recorded in March 2021.
HomeLet said London rental prices were slowly starting to rise again after experiencing a drop in previous months.
“The lack of available properties means the market is likely to continue to be very competitive,” said Andy Halstead, HomeLet’s chief executive officer, adding: “Tenants should be aware that finding a suitable property is proving to be a tricky task for many.”
According to the latest figures from Zoopla, demand for rental properties is at more than 50% above normal levels, adding that rents had risen by 20% in three years.
There has been only a 1% increase in the number of private rented homes in Britain since 2016, the site’s data showed.
Zoopla said the supply and demand imbalance has typically pushed up rents by 11.1% year on year.
“The demand for renting was incredibly strong in 2022,” said Richard Donnell, an executive director at Zoopla. “Rents will continue to rise over 2023 but at a slower rate, as demand moderates and affordability pressures start to bite harder on renters.”
In Manchester, average rents have jumped to £978 a month, an annual increase of 14.4%, Zoopla says, while Edinburgh tenants are paying £1,133 on average – 12.7% more than a year earlier.
Costs in Nottingham, Birmingham and Cardiff are all typically up by 10.9% – to £902, £849 and £1,043 a month respectively.
“Rents will continue to rise ahead of incomes unless we see a sustained increase in rental supply or a material weakening in demand, both of which appears unlikely,” the report said.
However, some experts say that competition is starting to weaken as more properties become available and, while rents will continue to rise this year, it will be at a slower pace.
Chestertons – which has about 30 branches in London – says it now has 30% more available rental properties than it did this time last year. The chain has brought 10% more new rental properties to the market in March 2023 compared with March 2022, and its agents conducted 19% more viewings than last March while handling 13% more offers from tenants.
• This article was amended on 8 April 2023 to replace to main picture, which in an earlier version was said to show houses and houseboats in Little Venice when the scene was in fact further east along the canal in Islington.
