Private sector rents in London have fallen during the pandemic: only by 0.1 per cent across the city as a whole compared with last May, according to new Office for National Statistics data, but by dramatic amounts in some of the most expensive parts of the capital. Listings sites like Zoopla have been reporting plummeting demand since last summer, with advertised rents down by 9.4 per cent and flats in Westminster, Kensington and Chelsea at their cheapest since 2011.
London is an outlier in this respect. In every other region of England, rents have continued marching upwards. The capital’s crash is a combination of the tourist industry being shut down, leading to holiday lets being returned to the long term market, and people able to work remotely moving out of city flats to the suburbs and shires. Suddenly, Inner London had plenty of landlords desperate to fill properties and renters had a lot more options. That’s a recipe a price cuts. But it isn’t necessarily good news for all private renters.
Certainly, some have benefited. Renters whose income has remained steady throughout the last year have been able to take advantage of the situation, by moving to somewhere cheaper, moving into a more expensive area that has become newly affordable for them or by stay put but negotiating a new, lower rent – just tell your landlord you’re thinking of moving out, share some examples of flats nearby going for less than what you’re paying and remind them how hard it would be to find someone as reliable as you are. Even if the landlord attempts to raise the rent to offset losses elsewhere in their portfolio (as many have), a tenant who has the option of moving out still has the upper hand.
But it’s a different story if you’re one of the 468,000 private renter households who now rely on Local Housing Allowance (either through Housing Benefit or Universal Credit) to pay the rent – an increase of 68 per cent in the year to February. For a start, those in that position are less likely to afford even lower market rates. Local Housing Allowance covers the full rent on only the cheapest 30 per cent of homes in a given area, yet 44 per cent of Londoners receive it.
That means many must make up the difference themselves. Even if they can find a cheaper home nearby, their reduced incomes mean they might struggle to pass affordability tests, assuming they can find a landlord who will consider letting to someone on benefit in the first place. Benefit discrimination is still common despite recent court judgements that have ruled it unlawful.
Other barriers include the difficulty of finding a deposit for a new tenancy and other moving costs and the impracticality of looking further afield for a home when your kids are in the local school or you rely on a support network close by. All this puts tenants at a disadvantage when negotiating with their landlords. Though some landlords have heeded the government’s plea early in the pandemic for compassion, it is a lottery.
In theory, all this is less of a problem at times when the rental market is heating up and landlords are looking to increase rents, rather than deciding to reduce them as in many cases at present. That is because if a new rent can’t be agreed, a landlord may serve a formal notice of an increase, which can be challenged by a tenant at a tribunal. Landlords may go through this process in the knowledge that there are potential tenants able to pay a higher rent and that they can use the threat of no-fault eviction to get their way in the end.
There is no equivalent process that the tenant can initiate to have their landlord to lower their rent to reflect the market. With no obligation on the landlord to revise the terms of the tenancy, huge sections of London’s renter population continue to be charged pre-pandemic rents. This partly explains the difference between the ONS data and the rent levels found on Zoopla – the ONS figure are for all existing rents, whereas Zoopla’s comprise only those for dwellings being advertised.
In reality, many private renters have had a raw deal throughout the pandemic. Around one in ten households are behind with paying their rent and evictions have resumed. Compare that with how businesses are being protected: Housing Secretary Robert Jenrick told them last week that their pandemic-related rent arrears are treated as “exceptional” and they won’t face eviction until March 2022. It’s even more galling when you consider that businesses can drive a harder bargain with their landlords as it is. They can simply fold, but residential landlords know their tenants need somewhere to live.
As things stand, rents in London won’t stay cheaper for long – demand for homes will pick up again as the economy recovers. Speaking about the recovery at the G7 summit, Boris Johnson rightly warned “what risks being a lasting scar is the inequalities that have been entrenched”. The Prime Minister must recognise that the greatest inequalities lie in housing, and have been worsened by the rent debt crisis and the stamp duty holiday, which has driven up prices.
The government’s priority must be to clear the arrears private renters have built up with a Covid Rent Debt Fund. In addition, as it develops plans to reform private tenancies, it must also make sure renters aren’t sucker-punched by a bounce in rents. Holiday lets need regulating properly so landlords keep homes in the long-term market. As well as protections from no-fault evictions, renters also need certainty that they won’t suddenly be priced out of their home and neighbourhood. Ultimately, we need government action to make rents more affordable – there are better ways to bring rents down than a global pandemic.
Dan Wilson Craw is Deputy Director of Generation Rent, which campaigns for the interests of private renters throughout the UK. Follow Dan on Twitter.
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