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London landlords evict tenants to go

Forced Evictions, Displacement, Olympics and other Mega-Events

London landlords evict tenants to go

Postby TenantNet » Thu Feb 02, 2012 1:48 pm

Olympic housing crunch: London landlords evict tenants to gouge tourists
By Marian Smith, msnbc.com

LONDON -- Landlords in Britain's capital are evicting tenants so they can cash in on this summer's Olympic Games by charging tourists many times the usual rent.

Homes in the east London boroughs where many events are to be held are fetching between five and 15 times their typical rates as properties are rebranded as short-term "Olympic lets." Some landlords are also enforcing expensive "penalty" clauses for tenants who want to remain during the gathering of the world's top athletes.

Rent controls are almost non-existent in Britain and some Londoners told msnbc.com that the looming increase in housing costs will leave them with no choice but to leave the city for the summer.

While the Olympic Village will house some 22,000 athletes along with 6,000 coaches and officials, countless tourists, athletes' families, journalists and sponsors will be left to jostle with 7.8 million residents for places to sleep. The accommodation crunch is expected to be so severe that some residents are planning to rent out their backyards to campers during the Games – which begin July 27.

"We're [seeing] landlords beginning to evict their tenants," Antonia Bance, head of campaigns for housing charity Shelter, told msnbc.com. "Lots of letting agents are writing clauses into contracts being signed saying you can live here with the exception of this period [during the Olympics]."

Those who are evicted or displaced by huge rent increases – as well as other tenants looking to move in July and August – will struggle to find affordable alternatives due to the temporary influx of tourists paying higher rates, experts say.

"It's all to do with supply and demand, and there's a shortage of stock," Matthew Martin, Greater London area lettings director for real estate agency Your-Move, told msnbc.com.

As the summer approaches, he said, "there are going to be opportunists ... people are going to pay an extortionate amount."

'I don't think it's right'

Shelter's Bance described the case of a couple in the Newham area who will be renting out the three-bedroom house they own in a former public housing project for 15,000 pounds ($23,600) for three weeks. The average rental price of a three-bedroom property in the borough is 1,189 pounds ($1,870) per month.

In the Dalston neighborhood, one-bedroom apartments that normally fetch around 300 pounds ($475) per week are now being advertised at 1,625 pounds ($2,575) per week.

And in Kentish Town, which is a 25-minute train journey from the new Olympic Stadium, a five-bedroom home is being advertised at 10,000 pounds ($15,845) per week during the Games.

It is difficult to know how many Londoners will be priced out of the city as landlords woo Olympic visitors, but interviews with property experts, real estate agents, tenants, prospective landlords and tourism-industry specialists suggest it will not be an isolated problem.

Joanna Doniger, owner of private rental company Tennis London, which finds short-term lets for players at the Wimbledon tournament, opened a new division of the company called Accommodate London last year after being bombarded with hundreds of calls from homeowners hoping to rent out their properties during the Olympics.

Doniger said she has been disappointed to discover that many prospective clients are actually investor-landlords who are kicking out their long-term tenants.

"I've had to take them into the corridor and say, 'What's this about?'" she said. "I just don't think it's right."

One of those who agrees with Doniger is David Brown. The 25-year-old moved into the top three floors of an old rowhouse above a shop in Whitechapel, east London, with four other people last October.

It took him two months to find something he could afford – he and two university friends had to search for two other housemates online before anything was in their price range.

As he drew up his contract, though, the real estate agent was adamant about one thing: if they weren’t out by July 15 – just 12 days before the opening ceremonies -- their rent would jump from 660 pounds ($1,020) per week to a "penalty" rate of 3,000 pounds ($4,635) per week.

Brown told msnbc.com he can't possibly afford that with a fledgling tutoring business and the temp work he's doing on the side. They'll be moving out.

"I'm actually considering taking up a job in Japan" teaching English, he said. "I'm not fleeing the Olympics, I really want to be here … The thing is, landlords can get away with charging that much more."

Because of the economic downturn, rental prices have risen dramatically in the past 18 months with fewer new properties being built. Some pockets of the city have seen spikes of 15 to 18 percent – which has only exacerbated the looming Olympic housing squeeze.

For instance, the average rental price for a two-bedroom property in the five Olympic boroughs – Greenwich, Hackney, Newham, Tower Hamlets and Waltham Forest – is 1,113 pounds ($1,751) per month, according to Shelter's 2011 Private Rent Watch report.

Darren Rebeiro, business development manager for real estate agency Keatons, which is affiliated with tourism body Visit London, said that five times the normal market rate is the agency's common short-term asking price during the Games in the Stratford area – where the 80,000-seat Olympic Stadium is located. He said clients were "happy" to pay those rates.

Elsewhere in London, tourists can expect to pay four times the usual price this summer. However, Rebeiro said some agencies are seeking up to nine times the market rate.

Part of the problem is that the east London boroughs around the Olympic sites are some of the poorest parts of the city and already have the highest rate of evictions. Most people pay anywhere from 55 to 70 percent of their monthly wage on rent, according to Shelter's 2011 report. A "sensible" amount to pay is closer to a third, Bance said.

Sign it or leave

The U.K.'s Housing Act of 1988 allows landlords to raise rents at the end of a lease – usually 6 months to a year in London – as long as they give two months' notice to their tenants. If the tenant disagrees with the increase there is very little they can do; the landlord can serve them with an eviction notice at the end of a contract without giving a reason why. And if the tenant refuses to leave, a court will support the landlord and will send a bailiff to remove the tenant from the property.

Furthermore, many people's contracts are "roll on" agreements that continue on from month to month without a fixed end date. In those cases landlords can raise the rent at any time with one month's notice. Additionally, there are no limits or regulations on how much a landlord can increase rent.

"If a landlord comes with a new tenancy agreement and says, 'Sign it and stay or go,' there's nothing [tenants] can do," Chris Hellings, advice line supervisor for Britain's National Landlords Association, told msnbc.com. "They either have to take it or go."

Vincenzo Rampulla, spokesman for the National Landlords Association, told msnbc.com that evicting tenants wasn't necessarily going to be a smart financial decision for landlords.

"Do they really want to kick out the tenant who's been paying on time all year … or are they going to want to squeeze out as much as they can for the Olympics, which is only a few weeks?" he asked.

However, Rampulla acknowledged that some landlords would be seeking to take advantage of the once-in-a-lifetime opportunity by cashing in.

"I know people get crazy during these kinds of things," he said.

People who own their homes, of course, are on the opposite side of the accommodation crunch, with those who can arrange to be away for several weeks in position to rake in considerable extra cash.

Kia Ramsay, 29, told msnbc.com that local real estate agents have been slipping leaflets under the door of her Tower Hamlets apartment for months – lately, one or two a day – about opportunities during the Olympics. The three-bedroom apartment, which she owns with her 39-year-old fiancé, is already desirable for being so close to London’s financial hub in Canary Wharf. Its appeal is even greater this summer because the marina below her building is being used for boats ferrying people to the Olympic sites.

"We thought to ourselves, well, let’s see what we can get out of this?" she said. Preliminary research on property rental websites gave Ramsay, a physiotherapist, tantalizing estimates for the reasonably high-end property: roughly 30,000 pounds ($47,199) for two months, she said.

"We were thinking about popping off somewhere because it's going to a nightmare anyway getting around London," she said. Recently, she placed an ad on spareroom.co.uk and is meeting with Doniger, of Accommodate London, for an official appraisal and professional photographs in a few weeks. She said if she can get between 3,000 and 4,000 pounds ($4,719 and $6,293) per week, it would be worth doing.

In addition to the short-term rentals, spare rooms and even couches are being advertised to Olympic visitors. A website called campinmygarden.com has also been launched as a cheap way for people to set up tents temporarily in backyards. One listing offers space in a "tranquil and lovely garden with shade … on one of the nearest Victorian streets to the west of the Olympic Stadium" for prices starting at 27 pounds ($43) per person per night.

Its homepage features a large picture of British Olympians with the date of the opening ceremony prominently displayed.
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