85,000 Rental Properties Needed Yearly in London to Hit Government Target
A new report has identified that around 85,000 new rental homes are needed every year in the capital, in order to reach government housing targets.
The report, which was commissioned by the NRLA (National Residential Landlords Association) and created by Capital Economics, an economics consultancy firm, identifies the serious shortage of properties available to the London rental market.
This supply deficit is based on the governments set target of the number of housing needing to be built to meet the rental demand in London. Currently in order to reach levels of demand, that target is set at 340,000 homes per year, to be built across the UK by 2025.
The Capital Economics’ report shows that if social rental properties and residences occupied by the owner, continues its average growth over the next decade, then the private rental market will require an additional 227,000 properties annually, to reach government targets.
This increase in property supply is also vital to meet the levels of the expected number of new households across the UK, which currently is predicted to be around 1.8 million. The capital alone would need an extra 83,000 new properties available for rent over the coming 10 years.
Government data shows that the supply of available private rental accommodation in London has fallen by 85,000 over the last five years. This shortage in supply is particularly challenging for the younger generation, either leaving home for the first time or needing accommodation for educational purposes. With this figure expected to increase by 12% (120,000) in the years up to 2030, finding accommodation for the 15-24 year old age group may be problematic.
Research consultancy BVA-BDRC, provided additional data which suggests that in central London, in the last quarter of 2021, almost three quarters of landlords saw a marked increase in the demand for rental homes. This figure indicates an increase of 54% from the BVA-BDRC’s previous report from Q3 2021.
The report from Capital Economics, suggests that in order to meet the supply targets that the Treasury needs find ways to encourage investment into the rental housing sector, and sets out a number of ways in which they can do this.
The report advises an increase to the number of new home builds and for investors and developers to make use of unused commercial property by converting into residential homes. It also pointed out that it would be beneficial for short-tern leases to be turned into long-term lets as well as ensuring that empty properties are upgraded to a standard where they are habitable and can be put back onto the rental market.
Chief executive of the NRLA, Ben Beadle, explains: “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.”
“The 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.”