London needs 83,000 extra private rented homes a year to meet its housing needs, a new report has found.
The findings come as government figures show the supply of private rented housing in London has fallen sharply over the past five years. Across the UK as a whole, the number of privately rented homes will need to rise by 227,000 per year to meet the government target of 340,000.
The report by Capital Economics, commissioned by the National Residential Landlords Association (NRLA), says this level of growth is needed if supply is to meet the needs of an anticipated 1.8 million new households over the next 10 years.
Given that renting privately is often the first step young people take when they need to leave home or university, demand will only increase. The 15 to 24-year-old age group in London is forecast to grow by more than 120,000 between now and 2030 – almost 12%.
Need to encourage private landlords
Additional data by research consultancy BVA BDRC suggests that in central London, 74% of private landlords saw an increase in demand for homes to rent in Q4 2021. This was up from the figure of 54% in Q3 2021.
In its report, Capital Economics sets out how, in order to meet targets for housing supply, the Treasury needs to encourage investment in the sector.
The researchers say most landlords that invest in private rental properties are private individuals – according to the most recent survey in 2018, 94% of landlords were individuals, having risen from 65% in 2001.
Yet they say a range of government policies introduced since 2016 have had a negative impact on landlords, including the withdrawal of mortgage interest rate relief, the stamp duty surcharge on the purchase of additional properties and a ban on lettings agent fees.
More long-term lets needed
Greater investment would, the report argues, support the provision of new housing in a number of ways. This includes increasing the rate of new-builds and switching commercial property to residential use.
Researchers also highlight the need to move rental stock from short-term to long-term lets and bring empty homes back into use.
NRLA chief executive Ben Beadle said: “As the demand for private rental properties picks up following the pandemic, renters across the capital will struggle to find the homes they need and want.
“For all the efforts to support homeownership, the private rented sector has a vital role to play in housing so many Londoners.
“Today’s analysis demonstrates the folly of the mayor’s calls for rent controls in the capital, a policy which would serve only to freeze investment in the very homes renters need.”