London’s soaring rents now swallow up 35 per cent of tenants’ salaries
More than a third of Londoners’ average pay went towards paying rent last year, according to the latest government figures, as tenants face a crisis in the capital.
Data released by the Office for National Statistics on Monday showed that London was the least affordable region in the UK in which to rent, with an average rental price in 2022 of £1,450, equivalent to 35 per cent of median income.
Rent was slightly lower in 2021 at £1,430, but represented a larger share of income at 40 per cent.
ONS data last week showed London rents saw their biggest monthly bump on record in September, with prices rising across the UK.
Renters in the capital are feeling the squeeze of a decreasing supply of units available to let, which has enabled many landlords to raise their prices and desperate tenants to overbid to secure homes.
“We regularly see rental properties inundated with numerous applications the day they hit the market, with tenants prepared to pay more than the asking rent and, in some cases, offering to pay 12 months up front,” Marc von Grundherr, director of London estate agent Benham and Reeves, told City PM
“At the same time, the government has consistently looked to deter landlords from the rental sector via numerous legislative changes designed to reduce buy-to-let profitability.
“As a result, stock levels have declined even further, the consequence of which is tenants are left with even less choice, lower quality rental accommodation and higher rents.”
The ONS data showed lower-priced rents in London are even less affordable, equivalent to 46 per cent of average pay for lower-income households
Rents in London have stayed between 50 and 35 per cent of pay since 2015, while other regions have rarely exceeded 30 per cent.
The ONS noted that while it has seen house prices increasing faster than incomes and UK inflation, private rents and the income of private renting households are not following a similar pattern.
It forecast limited changes to rental affordability figures in 2023.
Sam Reynolds, chief executive of renting platform Zero Deposit, said: “The London market is notoriously expensive when it comes to the cost of renting and the reality is that the average tenant is struggling with a far greater level of financial hardship within the capital, even with the often superior earnings on offer.
“Those that do manage to secure an ‘affordable’ rental are forced to pay a considerable amount of their income for the pleasure and that’s only once they’ve paid a deposit that amounts to five weeks’ rent upfront.
“Unfortunately, this issue is unlikely to improve as the key problem driving a lack of London rental affordability is the imbalance between tenant demand and market supply.”