It’s no secret that the cost of living in London has been on the rise for quite some time. But recent statistics show that landlords in the capital are being forced to reduce rents as the cost-of-living crisis puts a ceiling on prices.
According to Chestertons estate agents, which covers the higher end of the London market, there was a 50% jump in the number of landlords cutting their asking rents between October and November 2022. In fact, Richard Davies, of Chestertons, said that nearly one in three landlords cut their prices to secure a deal in November.
But why are landlords being forced to reduce rents? Essentially, the cost of living crisis has placed “an effective cap” on tenants’ budgets, meaning that many are unable to afford the rents that landlords have been asking for. As a result, landlords at the higher end of the market are opting for reductions of between 5% and 10% to secure tenants.
Across the wider London market, average rental prices fell from £568 per week to £551 between October and November, according to Foxtons estate agents. This drop of 3% means that landlords are now charging £68 less per month. Additionally, renters also cut their budgets by 1% over the same period.
It’s worth noting that prior to the pandemic, London rents had been soaring at the fastest rate on record. However, as the pandemic progressed, rent falls during lockdown caused many landlords to sell up, and tenants who were able to secure cheap deals in larger properties have been sitting tight since.
Now, however, it seems that rents have hit saturation as tenants grapple with enormous jumps in their energy bills and the largest drop in real earnings on record due to soaring inflation. This means that landlords are unable to raise rents any higher.
But this doesn’t have to be seen as a negative. According to Mr. Davies, “We believe that London’s rental market is now showing signs of stabilizing, with more rental properties coming onto the market and an increasing number of landlords being realistic on the rent they are prepared to accept to minimize any void period.” This is great news for tenants, who will have more options when it comes to finding a place to live at a more affordable price.
In summary, London landlords are being forced to reduce rents as the cost-of-living crisis limits the amount of money tenants can spend on housing. This is a sign that the market is stabilizing and becoming more reasonable for renters. A positive outcome is that with more rental properties coming on to the market, tenants will have more options when it comes to finding a place to live at a more affordable price.
