The number of homes being used as short term lets in London is exacerbating the capital’s housing crisis, and undermining councils’ financial sustainability.
New analysis by Savills, commissioned by a group of twelve central London councils, finds that there were 117,000 homes listed for short-term let across London last year. This is equivalent to one in 32 homes in London.
Short-term lets refer to properties rented out for less than 90 nights per year. In London, those who wish to rent their home for more than 90 nights a year must get planning permission from their Local Planning Authority.
It is thought that the number of short-term lets in central London is leading to increased levels of homelessness and higher rents in the private rented sector.
Savills’ analysis found that over half (52%) of the short-term lets in London were let for more than 90 days, leading to fears that many owners may be breaking the law. In the borough of Westminster alone, there are over 16,000 short-term lets, with almost 14,000 being whole properties, and over half of those available for more than 90 days.
Hosts with more than 21 properties own 24% of the total share of short-term rental properties in London. This is despite only 1% of all hosts owning more than 21 properties.
In central London, short-term lets represent a significant proportion of the private rental stock. In Westminster, there are enough listings to represent 40% of all private sector homes. In the Royal Borough of Kensington and Chelsea and Camden, the figures represent 35% and 25% of the private rental stock respectively.
Income from the short-term lets is a significant proportion of the total estimated private rental income in central London. In Westminster, annual income from short-term rentals is estimated to be £450million; equal to almost 18% of the total private rental income in the borough.
The UK is in the grip of a fast-growing housing crisis, which is most acute in the capital. London has:
The least affordable housing – the average home in London costs 12 times the average salary – compared to 8 times nationally. Private tenants spend a third (35%) of their income on rent, compared to a quarter (26%) nationally;
The biggest shortage of social housing – 300k Londoners are on the housing waiting list;
The highest homelessness levels – 175k Londoners – one in 50 – are homeless.
With one in 50 Londoners living in temporary accommodation, pressures on local authority budgets are pushing councils closer to effective bankruptcy.
London, and especially central London, need better regulatory levers to balance the visitor economy against residents’ housing needs.
More effective regulation would also benefit the hospitality sector, through bolstering hotels’ role in the market, which in turn would provide more jobs for Londoners, and more sustainable business rates for local authorities.
Following the publication of this analysis, Central London Forward will be working with boroughs, partners and stakeholders across central London to develop a set of policy asks of government to tackle this growing problem.
Welcoming new analysis of the short-term rental market in central London from Savills, Cllr Adam Hug, Chair of Central London Forward and Leader of Westminster council, said:
“The extensive and lucrative short term let market in central London is inhibiting Londoners’ access to affordable, secure housing, and placing upward pressure on already expensive private rents in the capital. In Westminster alone, there are over 16,000 short-term rentals which detract from permanent, secure housing for residents.
Councils in central London are working hard to enforce existing rules, but both further regulations, including a licensing scheme, and greater resources are needed to address this growing problem. London is a global city with a thriving tourism industry, but we need to get the balance right so that Londoners can continue to live in the city they call home.”
Cllr Olszewski, Leader of Camden Council, said:
“Stronger, more effective regulation of short-term lets in central London would benefit residents, councils, and businesses. It would prevent the loss of vital permanent housing stock for Londoners; contribute towards councils’ confidence to invest in direct delivery of social housing; and make the tourism industry more sustainable for the businesses reliant on it.”
