London Evening Standard: Rents in London rocket eight times faster than wages, new research shows
Thu 18 Apr 2013
Landlords say there is still red hot demand for homes across the capital from couples and families unable to afford to buy. Some of the steepest rises have been seen in the inner ring of family friendly neighbourhoods such as Fulham, Clapham, Balham and Shepherds Bush. Last month the average monthly rent in London stood at 1106, a rise of 7.9 per cent in a year and the highest level ever recorded, according to the latest Buy to Let Index from lettings agency network LSL Property Services. The increase compares with shop price inflation of 2.8 per cent and far outpaces the average rise in earnings, currently running at a meagre one per cent.
It means that 81 a more is being eaten up in rent on average in London at a time when salaries have barely moved. David Newnes, director of LSL Property Services, owners of estate agents Reeds Rains and Your Move, said: Rents in London are red-hot. With only modest improvements in the UKs housing supply, rents will keep being forced upwards. Over the next few months it looks likely the Spring bounce will continue. The rise has hit the thousands of young working Londoners forced to rent far longer than they planned by the relentless surge in property prices and the scarcity of mortgages. More than a quarter of Londoners now rent from private landlords compared with just 14 per cent in 1991 but many say they are now being priced out of the rental sector just as brutally as they have excluded from home ownership.
Union organiser Nell Andrew, 30, who earns almost 40,000 a year said she and her freelance illustrator partner are considering moving out of London because of their inability to escape student level existence after paying for the roof over their heads. The couple pay 1300 a month for a two bedroom apartment in Stamford Hill, Hackney, but want a bigger place to start a family. She said: I find it difficult to be complaining. I am not in the worst situation; I am on a healthy wage but the point is that the rent and bills soak up half of my earnings. We dont have money to save for a house and go on holidayabroad. People used to rent to save before buying but this is impossible for us. There are growing signs that tenants are struggling to pay the higher rents as they eat up an ever higher chunk of their take home pay.
For every 1000 owed to London landlords in rent last month, almost 100 was unpaid, twice the level of tenant arrears of just four months previously. Campbell Robb, chief executive of housing charity Shelter, said: The relentless rise of rents in the capital is putting more and more pressure on Londoners who are already fighting to stay afloat.? Our research shows that Rents in London rocket eight times faster than wages, new research shows nearly two thirds of Londoners are struggling or falling behind with their rent, leaving little left over for essentials let alone to save for a home of their own. Unfortunately, with so many priced out of homeownership and a shortage of new homes being built, its hard to see rents stabilising any time soon.
Richard Blakeway, the Deputy Mayor for Housing, said there was no chance of rent controls being reintroduced in London. But he insisted: If people are paying more they should expect more. There is a whole lot of things we are doing around a new private rental standard which will introduce greater transparency on the costs involved in renting, clearer expectations on when repairs should be done and clearer rental agreements. He said Boris Johnsons administration is also talking to larger landlords about piloting longer tenancies beyond the typical six months or a year in London. Last week the Commons approved a Government clampdown on rogue letting agencies that will force them to join an ombudsman type redress scheme. But agents said demand for flats and houses was still massively outstripping supply except in the most exclusive areas of central London, where rents have fallen slightly.
Peter Rollings, managing director of agents Marsh & Parsons, said: In places like Clapham and Wandsworth they are still going like a steam train. One beds have been outstripping two beds in recent months. People are deciding they would rather have a bigger better furnished one bed. Lizzie Clifford, London lead manager at the National Housing Federation, said: This is bad news for Londoners struggling to pay exorbitant rents, but its also bad news for the taxpayer a chronic lack of affordable housing means more than a third of the housing benefit bill goes on private rent. Rents will continue to rise in London until we start building enough affordable homes. That wont happen while this Government spends over 100bn on housing benefit in five years but only 4.5bn on building new homes.