Following a monthly rise of 0.9% to £1,047, London's rents have reached a new high for the second month in a row according to the latest figures from LSL Property Services. Currently, London renters pay an average of £41 extra per month, a 4% increase compared to June 2011 and with rents around 80% higher than the rest of the UK, are London's renters being "ripped off"?
Indeed, the proportion of people renting their homes privately across the UK has grown and is set to expand further, rising to 22% by 2025 with more than a third (36%) of households in London renting by this time according to a recent report commissioned by the Resolution Foundation and Shelter from Cambridge University. But while London landlords are seeing an average annual return on a rental property of around £1,166 according to David Brown, commercial director at LSLProperty Services concern that London tenants are being "ripped off" in more ways than one is growing.
James Davis, Upad founder and CEO comments,
"Tenants complain of numerous problems in the UK rental market, particularly in London where rents are significantly higher than anywhere else in the UK. A big issue in the market is that rising rents have put significant pressure on tenants, with late or unpaid rent in June now standing at 9.2%, an increase from 8.9% in the previous month.
"Because we are set to become a nation of renters we decided to conduct a survey into the most pressing issue tenant's face across Britain with a focus on London. Our findings highlighted some main factors including how lettings agents who traditionally have more control over London's market are also contributing to the "rip off" with variable fees and significant up-front charges; an issue that was recently brought up by Labour's Hilary Benn, who proclaimed that on letting agencies are "ripping off" landlords and tenants, charging varying fees for managing relationships between 1.4m landlords and their tenants."
We surveyed 227 tenants across the UK asking a variety of questions relating to their concerns and whether they feel they were being "ripped off". Asking the one million dollar question - "what is the most pressing issue for tenants nowadays?" We discovered that high deposits and getting them returned was one of the biggest factors with a proportion of tenants made to pay up to and beyond 12 months deposit.
Other issues included property maintenance, pets being allowed into the property and notice periods. However while these issues were also of concern to London tenants, this group also pointed to high rents, not finding suitable homes to live in and having to earn 2.5 times the annual rent as a minimum as problems affecting them. One London tenant explains:
"The size of my rent means that I can't save any money to buy a house. I earn a decent wage, above the average but still have no chance in the next 3-5 years of saving for a deposit. Another issue is paying for poor quality housing at such a huge expense. In London you can pay extortionate prices for not very much at all. And, if this wasn't enough, there are a number of lettings agencies who aren't helping either. They can charge exceptionally high fees and contribute to rising rents by artificially inflating the market."
With this is mind, an additional concern identified in the survey was the role that lettings agents play. On a national level, the findings revealed that while 73% rented property from a lettings agent 93% were concerned that they were being charged extortionate fees. On a similar note, 79% said that the level of service they received from their agent did not reflect the fees they paid with one disillusioned respondent explaining that they paid £444.00 for a very slow reference check.
Meanwhile, when asked how much they paid to move into their current property excluding rent and deposit, a number of tenants revealed that they paid up to a whopping £5,000 with 78% stating they had to pay an extra fee on top ranging from £100 to £800.