A leading agent and member of the Propertymark board says London’s letting agencies and private rental sector need government help - and fast.
Greg Tsuman, lettings director of Martyn Gerrard Estate Agents based in London and ARLA Propertymark Board member comments: “The private rented sector is now the second largest housing tenure in England and most people in London rely on rented properties due to the high cost of home ownership.
“However, due to mortgage stress testing which has faced borrowers with yet another hurdle to overcome and house price increases, buy to let borrowing in London is only possible for those with very large deposits.
“In addition, Section 24 changes and extra stamp duty on second homes has meant that landlords are paying more tax than ever before. The pending changes to energy efficiency rules will also bring further costs to landlords meaning the market will continue to be unfeasible for new and existing investors.
“As a direct result we expect rents to climb. To stop this trend, and for landlords to return to the London private rented sector, the UK Government needs to review its tax policies for landlords and introduce policies that support investment in the sector.”
Tsuman's comments come after Propertymark research has shown the knock-on impact of Brexit and Covid related travel bans on the sector in London.
London has had the lowest number of properties managed per letting agent branch since June 2020 in comparison to all other UK regions, with the most recent figure showing just 126 properties managed per branch in London, which is significantly lower than the national average of 196.
However, during this same period there's been a continual increase in the number of London based prospective tenants, growing from 98 per letting agent branch in June 2020 to 148 during August 2021.
The number of prospective tenants has now surpassed the number of properties available to rent, which is a situation currently unique to London.
Insight from Propertymark members has revealed that this increasing gap between rental stock supply and demand is largely due to approximately 10 per cent of the population having left London in 2020. This was fuelled by several factors, such as overseas residents being affected by Brexit and travel bans, whilst remote working released people from commuter ties.
Simultaneously, many short-term letting agreements switched to long term rentals throughout 2020, creating extra stock in London as demand was falling. This has resulted in a fall in rental value by as much as 30 per cent over a short amount of time.
Now that London is reopening, Propertymark insists that it is imperative property taxes are reviewed and more incentives are implemented to increase appetite from investors.