London landlords forced to cut rents as tenants priced out
London landlords are being forced to reduce rents, as the cost of living crisis puts a ceiling on soaring prices.
Between October and November 2022 there was a 50pc jump in the number of landlords in the capital cutting their asking rents, according to Chestertons estate agents, which covers the higher end of the London market.
Richard Davies, of Chestertons, said that nearly one in three landlords cut their prices to secure a deal in November.
Landlords at the higher end of the market are opting for reductions of between 5pc and 10pc because the cost of living crisis has placed “an effective cap” on tenants’ budgets, Mr Davies said.
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 was a drop of 3pc – meaning landlords are now charging £68 less per month.
Over the same period, renters also cut their budgets by 1pc, Foxtons said.
Since pandemic restrictions were lifted, London rents have soared at the fastest rate on record. Office workers, students and corporate relocators flooded back to the city all at once, just as supply plunged. City centre rent falls during lockdown meant many landlords sold up, while tenants who were able to secure cheap deals in larger properties are now sitting tight.
But now rent rises 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.
Mr Davies said: “We believe that London’s rental market is now showing signs of stabilising, 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 minimise any void period.”
According to Foxtons, London rental supply rose by 7pc month-on-month in November while the number of renters registering for properties fell by 26pc. This meant that there were 15 renters competing for every new property. This was a 31pc drop compared to October but was still historically high.
Rents agreed via Chestertons in November were up 19pc year-on-year, but the agent has forecast that this growth rate will slow to just 5pc across 2023 before flatlining in 2024.