Government needs to act following record increase in rents for Londoners
New figures released by the GMB trade union this week indicate that rents in London have shot up by more than 25% in the past six years. This means that rents are far outpacing wage growth, with a two-bedroom flat costing an average of £1,500 per month. Despite the focus of policymakers being directed to help young professionals get onto the housing ladder, these shocking numbers highlight the fact that the focus needs to be on helping young people with their rent in the short term.
Some boroughs in London have seen even higher increases. Greenwich, for instance, is the borough that has seen the biggest rise in rent: between 2011 and 2017 rent of a two-bedroom flat increased by 50 per cent to an average rent of £1,350 per month. Other London boroughs to see sharp rises include Newham, where rent increased by 47.4 per cent, Barking and Dagenham, where rent has increased by 42.4 per cent, and Lewisham, where rent has increased by 42.1 per cent.
Although prices have risen in England as a whole, with rent increasing by 18.2 per cent over the same period, the data shows that London has seen the most dramatic rises.
There is action the government can be taking now to address the situation. Emphasis should be shifted from building more homes and tinkering with stamp duty to driving rents down. Evidence has shown that stamp duty changes have pushed prices up and as a result, it is the yearly rental increases that are hitting Millenials in the pocket. The focus at the housing department needs to be on ways in which we can make rents more affordable.
Part of the problem is also the way that landlords have been squeezed in recent years. The recent tax hikes on landlords have only hit their margins with the knock-on effect being that they pass on this increased cost to renters. It is not clever to continuously penalise landlords as this government have been doing and it only serves to damage the lives of ‘Generation Rent’ who they claim to be helping.
The government should reverse Section 24 of the Finance Act 2015 as soon as possible, which has imposed a pernicious tax on landlords where tax can exceed income, forcing many landlords to abandon their profession. It is unsustainable and is a key reason that rents are going up so quickly in the private sector. This is not, as some claim, going to line the pockets of landlords, but to help pay the astronomical bills they are now facing.
