London’s private rented sector is facing a significant squeeze as the supply of homes available to let falls to just 2.9% of the total stock. This tightening market presents considerable challenges for tenants and landlords alike, particularly with the Renters’ Rights Act on the horizon.

Current supply levels across London

Research conducted by Benham and Reeves reveals that only 34,776 homes are currently listed for rent out of an estimated private rented stock of 1,188,368 properties in London. This equates to a mere 2.9% availability at any one time, underscoring the scarcity of rental homes in the capital.

Some boroughs are experiencing even more acute shortages. Waltham Forest and Enfield have just 1.3% of their stock available to rent, while Barking and Dagenham stand at 1.4%. Havering and Redbridge each record 1.5%, with Bexley, Hackney, and Haringey all at 1.6%. These figures highlight the uneven distribution of rental supply across London’s boroughs.

Impact of landlord exits on supply

Marc von Grundherr, director at Benham and Reeves, emphasises the fluctuating nature of rental market supply, noting some growth driven by the build-to-rent sector. However, he stresses that the reality for tenants remains difficult: “Those searching for a rental home in London face an incredibly tough task, with only a minute proportion of total stock actually available to new tenants at any one time.”

Von Grundherr points to the imbalance between supply and demand as a key factor behind long waiting lists and tenants resorting to paying six to 12 months’ rent upfront. This imbalance also contributes to sustained upward pressure on rental prices across the capital.

Looking ahead, the firm warns that the impending Renters’ Rights Act could prompt more landlords to leave the private rented sector, further restricting supply. This “real risk” of increased landlord exits threatens to exacerbate the already tight market conditions for renters.

Borough supply variations

While many outer London boroughs report availability rates around or below 2%, some central boroughs show comparatively higher figures, though these remain a small fraction of the overall stock. For instance, Newham records 2% availability and Lewisham 1.8%, with Bromley and Sutton both at 1.7%.

Central London boroughs such as Kensington and Chelsea and Westminster have higher rental availability, at 8.4% and 7.4% respectively. Despite this, these remain exceptions in a market where the majority of boroughs face very limited rental stock.

What this means for landlords

The current supply shortage presents both challenges and opportunities for landlords. On one hand, the limited availability and high demand can support rental income growth and reduce void periods. On the other, the potential for increased regulatory pressures, such as those from the Renters’ Rights Act, may influence some landlords to reconsider their participation in the market.

Landlords should carefully assess the evolving regulatory landscape and market conditions to make informed decisions about their portfolios. Maintaining compliance and understanding tenant needs will be crucial in a market where demand continues to outstrip supply.

Source: Based on reporting from Property118

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