Rental Prices to Soar in London During Olympics

Londoners, or more specifically renters in London, face the prospect of paying 3-4 times their normal rental rates during Summer 2012, according to a recent article in The Guardian. Supporters argue that the free hand of the market is merely at work and should remain unencumbered by additional laws and regulations. With the Olympics as a quadrennial mega-sports event the increased demand and fixed supply dynamic is to be expected. On the other hand, given the unique position the Olympics have in the world today as an event with a reputation for goodwill the question of social responsibility is reasonably raised by opponents of the rental rate increases. One should not be surprised that hosting an Olympics affects the local economy in both positive and negative ways, as the issue of rents clearly shows. For landlords, this is a once in a lifetime chance to extract additional profit. For tenants, the choice of residence becomes an unintended burden during the Olympics, forcing many to leave London during the summer, thereby affecting their jobs and families. I discuss the challenges host cities face in planning the Olympics in my book The Olympic Games Effect. The LOCOG (London Organizing Committee of the Olympic Games--as well as other host city OCOGs for that matter) does far more than just oversee the development of the Olympic Village and various venues for the purpose of sport. Their mandate also includes working with local government authorities to plan how best to minimize local distress and maximize local support. Despite forthright efforts not everyone's interests can be perfectly protected: if rents are capped, then landlords and proponents of free markets would argue that government interference is preventing economic gain for them directly and from those inflated rent-paying visitors who are also spending on many other goods and services during their stay; and if rents are left uncontrolled, then renters protest that they are being unfairly displaced, or taxed (through increased rents), or both. Of course, visitors would undoubtedly welcome cheaper rents, which might very well turn those rent 'savings' into increased purchases of goods and services during their stay, while also not displacing those who consider London home.