There was a silver lining for London renters unfortunate enough to have been forced to move house during the height of the pandemic, such as the reporter writing this article.
An exodus of tenants to leafier, quieter parts of the country saw supply skyrocket and prices go the other way.
The choices, it seemed, were as plentiful as the number of Covid cases being tallied on the daily news.
That golden period of rock-bottom rents did not last long.
Renters today, rightfully so, are holding onto properties for as long as they can, while landlords continue to flee the market, shooed away by pending tax reforms and soaring mortgage costs (even if the latter have come down a bit recently).
All the while, Tory MPs last December pressured fledgling prime minister Rishi Sunak into dropping mandatory housebuilding targets to save an embarrassing Commons showdown.
Those mandatory targets would have contributed 300,000 homes per year to the UK-wide housing pool, but ultimately, NIMBYism won out.
Not that securing the mortgage for one of those new builds would have been a given in the first place.
Soaring interest rates aside, the government is set to scrap help-to-buy at the end of this month, though shared ownership and the first homes scheme will remain.
Regardless of what factor you want to blame, the bottom line is, the housing market is facing a deficit and renters are going to be fighting in the streets over the scraps, whether that’s a windowless shoebox in Finsbury Park or a zone-six flatshare two miles from the nearest tube station.
Buy-to-regret
JLL data shared in The Telegraph suggested that by 2031, London will have a shortfall of 110,500 rental homes.
“In reality, this could be far higher, given the headwinds to home ownership and the challenges for small landlords limiting supply levels… Rents are rising. Tenants can’t find somewhere to live,” stated Emma Rosser, of JLL.
According to consumer website Which?, the average price that tenants pay their landlords monthly is now between £1,170 and £1,200.
Compared to pre-pandemic 2019 levels, the number of properties available to rent is down by 38%, while the number of people enquiring about rental properties is 53% higher.
The numbers aren’t sustainable in any way, shape or form, but there is little to suggest that relief is on the way.
Starting in April, the capital gains tax allowance will be cut from £12,300 to £6,000, before being further reduced to £3,000 from April 2024. Additionally, landlords can no longer deduct mortgage expenses from their rental income to lower their tax bill, though they can receive tax relief payments based on mortgage interest paid.
Which? suggested that this will limit the amount of tax-free profit landlords can make when selling a property.
We don’t need to shed a tear for the landlord, but the number of rental homes being sold at property auctions has doubled between July 2022 and January 2023 as buy-to-let investors rush to sell before the new tax rules take effect. This is creating further supply bottlenecks.
A group of cross-party MPs chaired by Labour’s Clive Betts called on the government to “review the impact of recent tax changes in the buy-to-let market with a view to making changes that make it more financially attractive to smaller landlords”.
In a time when it seem both tenants and landlords are getting stiffed, perhaps this is a rare opportunity for a shaky alliance.