The capital needs almost 85,000 new private homes a year to meet government housing needs, a new report has cautioned.
The report, drafted by economics consultancy Capital Economics and commissioned by the National Residential Landlords Association (NRLA), reveals the ‘stark’ shortage in the supply of rented homes across London.
These conclusions are based on government targets which state that 340,000 homes a year must be built across the UK by the middle of this decade to meet future demand.
Capital Economics reports that, if owner-occupied and social rented homes in the UK continue their average growth rate of 10 years, private rented sector supply would have to increase by 227,000 properties per year to meet government targets.
This level of growth is also needed to meet the needs of an anticipated 1.8 million new households over the next 10 years. Where London is concerned, the capital would require approximately 83,000 new rental properties a year over the next decade.
The estimates come as government figures show that the supply of private rented housing in London has fallen by 85,000 over the past five years.
Given that renting privately is often the first step young people take when they need to leave home or university, demand will only increase. The 15-24 group in London is forecast to grow by over 120,000 (or 12%) between now and 2030.
Additional survey data by the research consultancy BVA-BDRC suggests that, in central London, 74% of private landlords saw an increase in the demand for homes to rent in Q4 2021. This was up from the 54% figure revealed by BVA/BDRC’s Q3 2021 research.
Capital Economics sets out how, in order to meet targets for housing supply, the Treasury needs to encourage investment in the sector. It argues that greater investment would support the provision of new housing in a number of ways.
This includes increasing the rate of new builds and switching commercial property to residential use. Similarly, the report points to the contribution the sector can make in moving stock from short term to long term lets and bringing empty homes back into use.
Ben Beadle, chief executive of the NRLA, explains: “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.”
“The 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.”