The latest research by deposit replacement scheme Ome, has highlighted how detrimental a rental strike could be to London’s buy to let sector and the unintended consequences this would have on the capital’s tenants.
A new campaign has been recently launched by the London Renters Union called ‘Can’t Pay, Won’t Pay’, urging tenants to only pay as much rent as they can currently afford as well as: –
- Calling on the Government to suspend rent payments in the private sector for the duration of the Coronavirus crisis
- Calling on the Government to make the current evictions ban permanent
- Cancelling all rent debt
- Introducing rent controls as well as ending ‘Right to Rent’ migration status checks in the housing system
However, there are concerns that this could escalate to a complete rent strike, similar to that happening in New York; a move that could have dire consequences on the capital’s buy to let market.
In London alone, there are some 853,200 households in the private rental sector and the average monthly rent currently sits at £1,697. This means should the capital’s tenants go on strike, the London buy to let sector would suffer to the tune of nearly £1.5bn in one month alone.
This sum is at its highest in Westminster where a one month rental strike would set landlords back £115m, with Camden, Tower Hamlets and Wandsworth also seeing this monthly total exceed £75m.
However, Ome warns that such actions could have unintended ramifications for London’s tenants too, bringing an increase in evictions, a reduction in the number of properties available to rent and an even further rental increase as previous research also demonstrates.
Co-founder of Ome, Matthew Hooker, commented:
“There is certainly a cause for concern for many of the capital’s tenants at present, who will be finding the cost of renting even more of an uphill struggle due to the spread of the Coronavirus. It’s important that they have a voice during these tough times and one that is listened to. A safe home, now more than ever, is absolutely essential so that no tenant should have to debate between paying rent and putting food on the table.
That being said, I think there is room for more sensible solutions than calling for rent suspensions for the duration of the pandemic. We don’t know the long term impact of Coronavirus and, as our research shows, a prolonged period of rent suspension could be crippling to those that provide housing to so many families. The only guaranteed outcome of rent strikes and aggressive campaigning is the inflation of the caricatures pushed by the media and further damage to the fragile tenant and landlord relationships.
Landlords need tenants almost as much as a tenant needs a property to rent. For some landlords, their only source of income is their rental properties and by suspending rent we only succeed in pushing the problem to someone else, rather than dealing with the issue at its source. Two of Ome’s core values is transparency and flexibility because we believe that without these characteristics our market cannot evolve and improve.
Landlords and tenants must always be prepared to engage in honest and open conversation with the willingness to cooperate and come to an agreement that everyone can benefit from. Tools and services have sprung up from a number of great providers to help landlords and tenants do just that. At Ome, we accelerated the launch of our Rental Wellbeing Helpline, available to any tenant who downloads and signs up on our free app, to help support those that may have found themselves suffering mentally, physically, or financially without a clear path to turn to for help.
The Government is also implementing new legislation to help protect tenants and although it remains tough, a complete rental strike would do more harm than good for all involved. Not only would it have dire financial consequences on the London buy to let sector but it would almost certainly have the opposite effect on tenants, with stock reducing and rents climbing even higher as a result.
We would urge all tenants to talk with their agent and landlord, continue to pay as much rent as possible as they are legally obliged to do so, and seek advice and support from the numerous industry sources available if they do find themselves in extreme financial difficulty.”
