Londoners fight for flats in hot rental market

FINDING a rental property in London can feel like an impossible quest, with prices surging as demand vastly outpaces the number of available units.

People are returning to the city for in-person work and school, while the recent jump in mortgage rates has made things worse by keeping potential homebuyers in the rental market. As a result, the number of prospective tenants has more than tripled from early 2021 levels, going by data from real estate site SpareRoom.

At the same time, long-term tenants are staying put and locking in their contracts to avoid being hit by rent increases. The number of new properties available to rent fell 9 per cent in October from the year before, said property site Rightmove.

The result: More than seven people are actively looking for every one property listed, SpareRoom data show, resulting in bidding wars and exorbitant landlord demands. Those who are lucky enough to find a flat will have to pay up: Average rents jumped 16 per cent in October from the year earlier to £2,420 (S$3,966) a month, said Rightmove.

“It’s a real challenge for renters at the moment, as there are simply not enough homes available,” said Tim Bannister, director of property science at Rightmove.

Ana Oppenheim, 28, asked to view over 100 properties, spent countless hours calling agents, and put in dozens of offers without even seeing the rooms before she finally found a place to live. 

Evicted by her landlord in September from a £760-a-month bedroom in a house share, she spent a month sleeping on a friend’s couch before finding a room for £550 in New Cross, south-east London. The catch: She’s sharing a double bed with her best friend, who was also kicked out of their previous home.

It was a tough search. She would offer £200 extra on monthly rent and get outbid by people offering £500. Sometimes, she was asked to submit a cover letter. She’d compete with about 30 people at open houses and try to make jokes to “charm” the landlord. Her choices were slim: One flat she saw had a bed in the kitchen. Another had a toilet that doubled as a study room.

“I’ve rented in London for 10 years, and it’s never been like this,” she said. “It’s degrading.”

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One of the main drivers of the tight rental market is surging mortgage rates, which hit a 14-year high of 6.53 per cent last month. Typical first-time buyers are now spending close to half their wages to secure a home, said Nationwide Building Society, up from about one-third at the start of the year. Mortgage approvals dropped 10 per cent in September from the previous month, said the Bank of England. 

As a result, would-be first-time buyers are not exiting the rental market, reducing the available inventory of flats.

As people compete for rooms, it’s becoming more common to see bidding wars and extravagant demands from landlords, such as asking for six months’ rent upfront, real estate agents say.

Tim Hassell, managing director at real estate firm Draker Lettings, said his firm now gets 30 to 40 enquiries within two days of putting a property online, up from five to 10 before. BLOOMBERG