London needs almost 85,000 private rented homes a year to meet its housing needs, a stark report from economic consultancy Capital Economics has concluded.
The capital needs new stock the most, though every region needs housing delivery to increase compared to levels seen in the past decade, with the exception of the North East.
London will welcome a raft of new tenants in the years ahead, as the 15-24 cohort in London is forecast to grow by over 120,000 between now and 2030, a 12% increase.
The consultancy said the Treasury needs to support the creation of new builds, as well as encourage commercial property to be switched to residential use.
The authorities also need to focus on moving stock from short-term Airbnbs to long-term lets, while empty homes need to be brought back into use.
The report was commissioned by the National Residential Landlords Association.
Ben Beadle, its chief executive, said: “As the demand for private rental properties picks up following the pandemic, renters across the capital will struggle to find the homes they need and want.
“For all the efforts to support homeownership, the private rented sector has a vital role to play in housing so many Londoners.
“Today’s analysis demonstrates the folly of the mayor’s calls for rent controls in the capital, a policy which would serve only to freeze investment in the very homes renters need.”
In 2019 the Resolution Foundation noted that: “holding down the true market price of private housing via enduring rent controls rather than increasing housing supply and reducing demand is unlikely to succeed.”
The report found that over the past five years a range of policies have been introduced to make the private rented sector less attractive to current and prospective landlords.
Since then, mortgage interest relief has been withdrawn and a 3% stamp duty surcharge has been introduced for investors.
Landlords face further challenges in the year ahead, as the government plans to make it so an EPC level of C is required for new tenancies by 2025 or 2026, as well as for existing tenancies by 2028.
The government also plans to remove Section 21 evictions, where investors don’t need to provide a reason to evict a tenant.
Landlord groups have argued that without Section 21 the process of evicting a tenant will becoming extremely costly and time-consuming due to having to go through the courts to justify evicting tenants.
Government policies have already hit supply, the report said, as between 2016 and 2000 the annual average net addition to the stock of private rented sector dwellings was 5,000 compared to 205,000 in the previous 10 years.