When my friend and I started hunting for a rental flat in the south-east London district of Peckham over summer, we didn’t expect the search to be quick. But six months, 50 viewings and a dozen or so rejected offers later, we’re still looking.
After boomeranging back to our family homes not long before the pandemic started, the two of us had unknowingly decided to re-enter the rental market during its most chaotic period in a generation.
In the autumn, rapidly rising mortgage rates slammed the brakes on the capital’s runaway sales market — but for renters like us, the crisis rages on.
We’ve queued around the corner to view properties, offered to lock in for 24-month contracts and even bid on apartments before seeing them — all in an attempt to beat the competition. But to no avail.
Compared with 2019, demand for two-bedroom properties in London is up 59 per cent, while the number of places available to rent is down 35 per cent, according to Rightmove, the UK’s largest online property portal.
“It’s like everyone who left London or went back to Mum and Dad’s during the pandemic was in the same WhatsApp group and decided the very same week: ‘Should we all move back?’” says Kristjan Byfield, co-founder of the London-based letting agency Base Property Specialists.
What really happened was the mass return to cities post-lockdown, combined with ballooning student populations — and would-be buyers getting priced out by high mortgage rates — swamped the rental market with demand.
Meanwhile, Britain’s rental stock of 5.5mn homes has been more or less flat for the past seven years, according to Zoopla, as home building falls below targets and landlords sell up because of higher taxes and tighter regulation.
It’s now common to get up to 70 inquiries per flat and to close listings within a few hours, says Byfield. And more unscrupulous landlords and letting agents are using the imbalance in supply and demand as “an excuse to take advantage” of prospective tenants, he adds.
As one agent confided in me during a viewing, she saw it as “part of [her] job” to incite a bidding war. In an extreme case, a friend lost out on a two-bedroom flat on the market for £2,000 a month to a young couple with a baby who bid 50 per cent above the asking price out of fear they would be left homeless with their newborn.
As a result, the average rental price for a two-bedroom flat in London currently stands at nearly £2,200, 18 per cent higher than last year. But it’s not just price that landlords are dictating in a seller’s market.
In August, my friend and I had a bid accepted on a two-bed flat in East Dulwich, which neighbours Peckham, but only after a 45-minute interview with the landlady and her property manager in which they pried into our personal lives.
In order to finalise the offer, they wanted to see three months’ worth of bank statements to check whether we spent excessively on credit cards or gambling. We initially hesitated before sending them the documents, and our reluctance made us appear “untrustworthy” and they voided the offer.
Along with more exacting checks on tenants, landlords are also choosing renters with higher income ratio than before to “recession proof” their rental agreement — just in case one of the tenants loses their job, Byfield tells me.
At least some of the heat has been let out of the rental market in recent months — though much of this is down to the usual seasonality of the market. In November, the average member branch of UK estate agent body Propertymark registered 77 new rental applicants, down from an all-time high of 147 new applicants in September but still above the pre-pandemic average of 61 new applicants for November.
Lucy Morton, head of UK residential agency JLL, says the market is unlikely to calm down anytime soon. “I’ve never seen the market as frenetic as it is and next year I think it’s going to be frenetic again,” she says.
In October, my friend and I had a second offer accepted by a couple in the process of buying a bigger property in the suburbs to accommodate their growing family, while planning to rent out their old place in Peckham. But as mortgage rates soared in the aftermath of Liz Truss’s “mini-Budget”, the chain on their new property purchase collapsed, nixing our rental agreement along with it.
For a lot of tenants, the rental market amounts to “shouting into a cave and getting nothing back”, Byfield says. As for my friend and me, we’ve resolved not to get our hopes up if and when our next offer is accepted. Still, roll on 2023 — fingers crossed it will be third time lucky.
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