Private renting in London

Over a million households in London are renting privately ¹. Demand for private rented accommodation in the city has increased substantially over the past decade, with rapidly increasing house prices and an acute lack of social housing leaving many Londoners with no other tenure available to them.

Many households who are renting privately in London are currently living in unsafe, poor-quality housing, yet are unable to afford alternatives. Private renters in London also have to deal with insecure conditions not faced by homeowners or social renters, as current legislation allows landlords to evict private tenants without fault. With the fear of eviction preventing many renters from addressing issues with their landlords, greater regulation of the sector is required to ensure that renters have decent, safe and secure homes to live in.

Selective licensing

In light of these issues, some local authorities have sought to increase the regulation of their local private rented sector (PRS) by implementing property licensing schemes. Among the types of licensing available, selective licensing schemes require landlords in a specified area to obtain an approved licence from their local authority for properties occupied by no more than two unrelated households.

Councils must determine whether an area meets certain criteria for a licensing designation and set out how they would use such a scheme to remedy problems in the area’s private rented sector. The fees charged for schemes are calculated to fund the expansions in staffing and spending necessary to fulfil the scheme’s objectives, like improving property conditions in the local PRS or reducing anti-social behaviour (ASB) – they cannot be designed to generate a surplus.

Chapters 1 and 2 of our report explore how selective licensing has operated since its introduction in 2004, primarily focusing on local authorities’ experiences in London. Although selective licensing has been effective in improving property management and conditions, we find that both local authorities’ limited capacity and the interface with central government required by current regulations are preventing licensing from reaching its full potential.

The Property Portal

Chapter 3 of our report assesses the government proposals for a Property Portal, sometimes referred to as a national landlord register. We explore how the Portal could interact with selective licensing, and what features it would need to be most effective in strengthening local licensing schemes.

A future-proofed system for London

Chapter 4 of our report puts forward a blueprint for a reformed, future-proofed system of property licensing for London, in which local authorities are able to design and implement their own schemes with guidance from the Greater London Authority (GLA).

Beyond property licensing

The underlying structural issues of London’s rental market cannot be entirely fixed by improving licensing and enforcement practices. Central to the problems of London’s rental market is the imbalance between supply and demand. Rising house prices in conjunction with increasingly unavailable mortgages have pushed millions more into the private rented sector – a sector in crisis, exacerbated by a recent boom in demand from returning residents and a slow-down of growth in supply. ² London’s rental market has also been impacted by short-term lettings platforms such as Airbnb, which many argue have reduced the supply of permanent housing through the conversion of homes into tourist accommodations. ³ The scarcity of social housing has also forced many Londoners into the private rented sector, including many vulnerable tenants and families that require more stability or support than private landlords are equipped to provide. Across 2021/22, the total number of households on the social housing waiting list in London was 301,753 – more than double the average for all English regions (134,042) and more than 150,000 households higher than in 2015/16. ⁴

Centre for London’s housing programme, Homes fit for Londoners, will be exploring long-term solutions for London’s housing needs – including the reforms necessary to make private renting a more sustainable tenure for the city’s residents. Alongside these reforms, local authority licensing and enforcement programmes can make a real impact on tenants’ lives and raise standards across the sector.