London’s PRS Growth

This is the first article in the series Making Sense of London’s Private Rented Sector, focusing on the significant growth that has occurred across London. Analysis of the figures at borough scale indicate that this growth is by no means occurring evenly across the capital.

What’s happening?

Huge growth in the number of private renters

The Private Rented Sector (PRS) is the only tenure in which all boroughs experienced growth between 2001 and 2011. But the extent of this growth varies significantly. City of London is a low outlier, with an increase of only 526 households, whereas Tower Hamlets had nearly 20,000.

Figure 1: PRS household numbers, 2001
Figure 1: PRS household numbers, 2001
Figure 2: PRS household numbers, 20011

The growth in concentrations of PRS households [Figure 2] indicates that what was predominantly an inner-London tenure radiating out gently is now exploding out at a furious rate. While the highest concentrations of PRS remain Westminster and Wandsworth, many other boroughs are gaining on them. These include immediate Lambeth, but also Barnet, Newham and Ealing – all outer London boroughs.

There is less change within the low rankings; City of London, unsurprisingly, remains the lowest, and the bottom five remain the same, though in a slightly different order. However, the proportional growth from 2001 to 2011 of the biggest (Westminster) and smallest (City of London) are similar: Westminster grew by 43%; City of London by 50%. In fact, these percentages are two of the smallest growths experienced across London.

Uneven Proportional Growth

Looking at a proportional growth map in more detail indicates where areas have seen the greatest change, causing borough housing officers to need to rethink their service and ‘offer’.

Figure 3: Growth in proportion of numbers of PRS households, 2001–2011
Figure 3: Growth in proportion of numbers of PRS households, 2001–2011

There has been significant growth east, as well as a major slowing down of private renting growth in the inner west [as illustrated in Figure 3]. Despite still having one of the lowest numbers of private renters, Barking & Dagenham has seen astounding growth proportionally, with the sector more than tripling in size. Tower Hamlets, Enfield, Hackney, Greenwich, Newham, Havering, Lewisham and Harrow have all doubled or more.

Similarly, the lowest five growth areas have been in inner and outer west London. While Westminster, Kensington & Chelsea and Camden still have very high numbers of private renters, there is an unmistakable geographic shift occurring, with implications for an increasingly under pressure east London.

Reasons for growth

Population growth

According to census estimates, London’s population grew by 11% from 2001 to 2011 to a total of over 8 million. Based on ONS mid-year population estimates, the mid-2014 population was 8.54 million, with a growth of 122,000 in that year alone. The GLA estimates this to be the highest single-year increase in Greater London’s history.

This shows how quickly census information can become outdated, and just how fast the pace of change is in London’s growth. With shortages of social-rented stock, and owner occupation too expensive for most to consider, this growth can only be met by the PRS at the moment.

Growth in population not being met by increase in supply

The average household size is also increasing, due to an insufficient number of homes being built to meet the growing population. In Housing in London 2014, GLA showed that this is a London-specific problem; in England, the number of households is rising and so household size is falling.

An increase in household size can lead to overcrowding, which is prevalent in London’s PRS. We consider this in the second article in this series.

Shifts in other tenure sizes

Social-renting households

Figure 4: Change in numbers of social-renting households, 2001–2011
Figure 4: Change in numbers of social-renting households, 2001–2011

Looking at where the shrinking in the social rented sector has occurred by borough [Figure 4], the more significant losses have been in boroughs with more to lose in the first place. The largest losses have been in the inner south-east boroughs of Southwark and Lambeth – yet they remain the boroughs with the highest number of social-rented households.

Thirteen boroughs have had modest gains in the number of social-renting households, which suggests an increase in the amount of stock. Most of these are in outer London boroughs with small social portfolios, but Hackney and Westminster have also had increases.

Overall, the geography of social renting has not shifted, with only modest losses and gains in social renting between 2001 and 2011.

Owner-occupying households

Figure 5: Change in numbers of owner-occupying households, 2001–2011
Figure 5: Change in numbers of owner-occupying households, 2001–2011

There have been more significant changes to owner occupation. Comparing levels of owner occupation in 2001 and 2011 [Figure 5], only five boroughs have had an increase in owner-occupying households: Tower Hamlets, Islington, Westminster, Lambeth and Wandsworth – all inner London boroughs with demographically mixed populations.

The other 28 boroughs have experienced losses in the number of owner-occupying households, the most significant being in parts of outer London – Croydon, Enfield, Ealing, Brent and Merton.

The main reason for this is likely to be lack of affordability, which we consider in the third article of this series.

What can we surmise from these trends?

The PRS will continue to grow, surpassing owner occupation as London’s dominant tenure

Although the national political climate encourages owner occupation with Help to Buy and other tools, the cost of housing in London remains prohibitively expensive for a growing number of people. It’s likely that more and more would-be owner occupiers will remain in the PRS.

The number of households that are social renting has not changed drastically so far, but the government’s planned Right to Buy policy could change that, as boroughs are forced to sell off existing and new social-rented units. A recent study for Islington, Camden, Haringey, and Enfield about the impact on inner-city areas found that 3,500 homes would be sold off over the first five years in those four boroughs alone. This would put further pressures on outer London.

The significant population growth between 2001 and 2011 was in inner London, considerably increasing housing density. As people continue to want to live in inner London boroughs, overcrowding will increase, as will the number of people living in Houses in Multiple Occupation (HMOs).

Pressure on east London will continue to grow and shift outwards

With so many people competing for PRS properties in inner London, and social-renting households moving into the PRS due to the selling of council stock, there will be an even greater influx of people into outer London boroughs. Other issues dealt with in later posts, such as affordability and quality of stock, all add to this geographic shift.

In a sense, this is part of London’s inevitable growth outwards, with an emphasis on the east due to its greater land opportunities. But it is not clear whether those boroughs particularly affected have been prepared for such a rapid influx of people. These levels of growth put huge pressures on a council’s resources and, in terms of housing, there’s a strong need to both build new housing and ensure that both the physical state and management of the existing stock is adequate.

It should also be remembered that pronounced geographical shifts in the housing market inevitably lead to a lot of disruption and displacement for communities, with the usual tendency towards the more vulnerable and less affluent. Other council resources, such as adult social care and children’s services, will also come under great pressure in these outer London boroughs.

This article has looked at the growth of the PRS in London and areas this growth has most affected. The next post will consider the housing stock itself.

Further reading

GLA, SHLAA 2013 – identifying the development capacity of London by borough/sub-region, with greatest capacity in the East.

Data sources used for this article

To compare tenures between years, we used the 2001-2011 census comparator tool, which has collated 2001 and 2011 statistics on key themes. We used the same table to compare changes to other tenures between 2001 and 2011.

For population growth, we used GLA analysis of the mid-year population estimates, which updates the census figure annually and includes adjustments for births, deaths, international migration and internal migration.