ANNE ASHWORTH

Fresh thinking from the government is required if London is to meet the demands of its white-hot rental market

This spring, the surge in rents is the hot topic in any propertymarket conversation. People are talking about the implications of the additional increases forecast for this year, as fierce demand continues for rental accommodation, with the best-in-class and even the simply mediocre being snapped up almost immediately.

One central London agent commented: “You put it on, it goes, such is the lack of rental stock. I’ve seen flats that should be £700-a-week going for £1,200-a-week. The corporate tenants and the international students are back, and they’re competing for the best places.”

The trend is proof of London’s allure. But it could also pose a threat to our city’s future – which makes the lack of a political strategy for the private rent al sector ba ing, given London’s importance to the wider economy.

The rises in rents shows that this is one of the best places to work, to be educated, and to have a good time. We have great culture, architecture, restaurants, history, job opportunities and acres of glorious parks for relaxation and recreation. These attractions are drawing people back to London from other regions and the rest of the globe. But the rising rental prices risk depriving London of the talent in every field of endeavour that the city requires to flourish.

The rental market data underlines the need for action. The cost of renting increased in every London district last year, with average rises of 11 per cent in the suburbs. In the prime - central neighbourhoods, which were becalmed during the pandemic, growth reached 27 per cent, as Aneisha Beveridge of Hamptons reports.

The tempo may be slowing a little, under pressure from a ordability which is a ecting most groups of tenants. Except, it seems, the students coming from Hong Kong, Singapore and elsewhere to attend LSE, Imperial College and other universities. Many stay on after their studies end, settling in areas like Fitzrovia , which has a di erent funky co ee shop for every day of the week.

Grainne Gilmore of Cluttons, Jessica Tomlinson of Savills and others still expect average rises in rents of five per cent this year. The pace may slacken in 2024, but Tomlinson still expects another upward move of a round three per cent.

Since rents are also soaring in other cities, the chancellor ought to say something in this month’s Budget, given its pledge to turn Generation Rent into Generation Buy. But the government may prefer to stay silent, hoping that the reports of would-be tenants queuing for properties start to disappear from the news. The tougher tax regime for landlords is the major cause of the sharp decline in the stock of homes to let which has driven up rents. But any relaxation of this controversial regime would attract more of those unwelcome headlines.

The government is painfully aware that its housing strategy will further reduce its support among younger voters, especially as Labour has pledged to “tilt power more towards tenants” But perhaps ministers think that they ’ ll be able to turn the spotlight onto the failure of many Labour councils to deliversu cient social housing – and to facilitate more a ordable housing for those who can buy

But central and local government could make up for their shortcomings by encouraging the provision of more build-torent (BTR) blocks, purpose-built schemes that o er amenities and community spirit. Oliver Heywood of Knight Frank says that new, even more luxurious blocks are arising that provide co-working spaces, gyms and treatment rooms.

More such homes are needed if London is to retain its edge as the city in which to gain a top-flight degree, start a flourishing business or scale new professional heights L

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