Just 5% of London’s rental homes are affordable to low-income households

There has been an alarming decline in affordable homes to rent in London, with only 5% of properties being accessible to low-income households relying on Local Housing Allowance (LHA) to cover their rent.

The research, conducted by Savills and commissioned by London Councils and Trust for London, paints a bleak picture of the city’s housing market.

It found that the number of private rental properties available in London has been steadily shrinking, with 45,000 rental homes sold without replacement between April 2021 and December 2023.

This represents a loss of 4.3% of the capital’s privately rented stock, particularly impacting lower-cost properties.

Landlords who are selling up in London are highlighted as leading to a declining supply of homes to rent.

‘Low-income private renters’

London Councils’ executive member for housing and regeneration, Councillor Grace Williams, said: “These stark figures are the latest evidence of the massive pressures faced by low-income private renters in the capital.

“London’s homelessness emergency is fundamentally driven by the chronic shortage of affordable housing.

“The falling number of privately rented homes and worsening shortage of affordable accommodation is an urgent challenge for Londoners and London boroughs.”

She added: “Further action at a national policy level can help us turn the situation around and we are committed to working closely with the government on this important agenda.

“Interventions such as increasing Local Housing Allowance rates to keep pace with rent rises would help prevent homelessness and save public money in the long run.”

Growing risk of homelessness

The study’s findings have intensified concerns about the growing risk of homelessness among low-income Londoners.

As the availability of affordable housing dwindles, many residents are facing increasing pressure to find suitable accommodation.

The study highlights several key factors contributing to the decline in affordable rentals:

• Rising rents: The cost of renting in London has soared in recent years, outpacing the increase in LHA rates. This has made it increasingly difficult for low-income households to afford private accommodation
• Landlords selling properties: Many landlords have been selling their rental properties to owner-occupiers, further reducing the supply of available homes
• Loss of affordable properties: The most affordable rental properties are being sold at a faster rate than higher-priced properties, exacerbating the shortage of affordable housing.

Action to address the housing crisis

Now, London Councils is calling for urgent action to address the housing crisis, including:

• Permanent increase in LHA rates: The government should make the recent increase in LHA rates a permanent measure and ensure that they are updated annually to reflect market rents
• Increased funding for local authorities: Local authorities need more funding to purchase housing being sold by private landlords and to prevent homelessness
• Doubling of the Homelessness Prevention Grant: The government should double the Homelessness Prevention Grant to provide additional support to local authorities.