Private rental homes unaffordable to low-income households, research finds
A recent study by Savills, commissioned by London Councils and Trust for London, reveals that only 5% of private rental listings in London are affordable for low-income households relying on Local Housing Allowance (LHA). This statistic highlights the ongoing challenges faced by many Londoners in securing affordable housing, particularly as the private rented sector (PRS) has contracted significantly since April 2021.
Between April 2021 and December 2023, approximately 45,000 rental properties—accounting for 4.3% of the city’s private rental homes—were sold without replacement. This decline is most pronounced in the lower-cost segment of the market, exacerbating the already critical situation for low-income renters. The research underscores a broader trend: the availability of listings affordable to LHA recipients has steadily decreased throughout 2023-24, despite a government increase in LHA rates intended to cover the lowest 30% of local market rents.
As of July-September 2024, the LHA rates were no longer aligned with market conditions, resulting in only 5% of listings being affordable for those dependent on this support. The average value of properties sold to owner-occupiers during this period was around £410,000, further illustrating the financial barriers facing potential renters.
The implications of this research are profound, with London grappling with significant homelessness pressures—about one in 50 residents are currently homeless and living in temporary accommodation. London Councils reports a 15% increase in households needing homelessness support over the past year.
In light of these findings, London Councils is advocating for the LHA increase to become a permanent measure, with annual adjustments to reflect market changes. They also call for enhanced funding for local authorities to acquire rental properties and a doubling of the Homelessness Prevention Grant.
Cllr Grace Williams emphasized the urgent need for national policy interventions to address the chronic shortage of affordable housing in London. Savills’ Director Chris Buckle pointed out that the affordability crisis necessitates policy solutions that not only increase housing supply but also directly target the pressing needs of low-income renters.
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