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 apparently enforcing expensive 'penalty' clauses for tenants who want to remain during the gathering of the world's top athletes.
Popular: Homes (not these pictured) in the east London boroughs are fetching between five and 15 times their typical rates
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 gardens to campers during the Games - which begin July 27.
Antonia Bance, head of campaigns at housing charity Shelter, said: 'We're [seeing] landlords beginning to evict their tenants'
'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].'
Experts say 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.
Matthew Martin, Greater London area lettings director for Your-Move, said: 'It's all to do with supply and demand, and there's a shortage of stock'.
Part of the Athletes Village accommodation in Stratford. Visitors and journalists will have to jostle elsewhere for a place to sleep in the city
As the summer approaches, he said, 'there are going to be opportunists ... people are going to pay an extortionate amount.'
Miss 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 for three weeks. The average rental price of a three-bedroom property in the borough is £1,189 per month.
In Dalston, one-bedroom apartments that normally fetch around £300 per week are now being advertised at £1,625 per week.
And in Kentish Town, a 25-minute train journey from the new Olympic Stadium, a five-bedroom home is being advertised at £10,000 per week during the Games.
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.
Ms 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.'
David Brown, 25, moved into a property Whitechapel, east London, with four other people last October.
When their contract was drawn up, he said the estate agent was adamant that if they weren't out by July 15 their rent would jump from £660 per week to a 'penalty' rate of £3,000 per week, which he cannot afford.
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