• Jada Johnson

The Guys and Gals of Generation Rent: London’s Rental Market Crisis

Peace, Land and Bread are proving hard to come by in the UK's capital city.

Scrolling through the Facebook group ‘Gals Who Rent’ is somewhat of a crash course in the ills of London’s rental market for graduates. The page is, like many of its kind, a place for students and graduates to find a property to rent, pair up with flatmates and advertise spare rooms. A sizeable majority are looking to move to or within the capital, and it is perhaps this factor which makes the page a far more sobering scroll than the other graduate support groups set up by the ‘Gals Who’ initiative. Posts frequently come from women who have been searching for a flat in London for months on end, paying extortionate amounts to commute to their graduate roles, staying with friends, and sofa surfing. Sometimes, members are simply asking for advice on how to navigate a market where listings disappear in minutes and viewings require prospective tenants to queue around the block. None of this is promising for the 86% of graduates who move to work in the capital within 15 months of leaving a university outside of it.

Priced out of the housing market for years to come, these members of ‘Generation Rent’ are all too aware of the implications of turning down a new job opportunity in the current economic climate, but this tough decision is becoming a reality for those without a network of family and friends who they can rely on during the search for a place to stay. No one is surprised to see that London’s housing crisis continues to trickle down from landlord to tenant, but with popular flat share websites like SpareRoom now reporting seven renters for every one room in the city, and rents in some boroughs rising at the fastest rate since the financial crisis, new entrants to the job market are learning this the hard way.

London’s rent crisis is the result of a perfect storm of market factors. Post pandemic, young professionals who were once working remotely from outside of the city, or living with parents, are now looking to rent properties which will allow them to return to the office. As is usual for autumn, the return of students saw an increase of activity for estate agents; but this year, with larger cohort numbers and a return to in person teaching, many were forced to pay rent over the summer months in order to secure properties for the academic year. Even from a demand perspective alone, the rental sector appears to be in trouble.

The full scope of the property drought, however, can only be understood through the issues of supply. With new property builds paused during the pandemic, the recent trend of landlords selling off existing rentals has been particularly concerning. Regulations tightened in 2015, requiring landlords to pay tax on rent rather than only on profits. As a result, the appeal of the job declined, and selling up to invest elsewhere often seemed a more profitable strategy. Moreover, the current scarcity of buy to let mortgage deals and the drastic increase in the price of fixed rate offers which followed Kwarteng’s mini budget forces landlords to make tough decisions. Hunt’s U turn may have stabilised market interest rate expectations enough mitigate the worst of mortgage rate increases, but we are yet to see prices decrease, and on the flip side of the coin, the U turn on tax cuts will also result in many property businesses being taxed at higher rates. Prices will continue to be passed onto tenants already affected by the cost-of-living crisis, and landlords will continue to sell up.

This picture of a sector in turmoil helps to contextualise some of the posts on the ‘Gals who Rent’ forum. Fierce bidding wars and requests for upfront payments of a year’s rent show how much the stakes have been raised for potential tenants. Being able to prove financial stability to a landlord has never been more important, and for prospective graduates, it can be worrying to hear that a decent income and a good guarantor doesn’t always cut it anymore. More often than not, success seems to come from hours of searching and pure luck, as well as a serious willingness to compromise. For some, this search will be just one more price to pay for the wealth of career opportunities which London has always offered. Others might wonder whether this large scale of migration of graduates, particularly those from lower socio-economic backgrounds, will continue under these conditions.