Skyrocketing rent prices have been pricing prospective tenants completely out of much of the market for some time. Coupled with the escalating living-cost crisis, millions are finding it difficult (if not practically impossible) to make ends meet.
When and where the whole thing will begin showing at least modest signs of improvement remains to be seen, but things are almost certainly going to get worse before getting any better.
Younger people in the capital are finding themselves particularly hard hit, where the average cost of renting a home has always been disproportionately high. With average weekly rents having once again broken all records, a sizeable proportion of London’s private renting community is considering leaving the city entirely.
According to a new study conducted by the charitable foundation Trust for London, the average cost of renting a home in London is now £533 per week. This represents an increase of more than 16% since the same time last year, at which point private rentals were already completely unaffordable for many.
As a result, as many as one in four young renters are now saying they may be forced to leave London in the near future due to their growing inability to pay their bills and sustain their lifestyles.
Wages are insufficient to cover living costs
The study also indicated that between April and March this year, the average rental price for a one-bedroom property in London was the equivalent of just over 46% of the average Londoner’s gross median pay. By contrast, renters across the rest of the country use around 26.4% of their gross median pay for rent.
Reporting separately, Foxton Estate Agents said that one of the drivers behind skyrocketing rent prices in London was explosive demand, coupled with minimal available inventory. They said that around 23,000 rental properties were listed on the market in September, meaning that an average of 29 people were competing for each property listed.
There are approximately 9% fewer properties available on the private rental market in London than at the same time last year, while demand has increased by as much as 20 per cent.
Consequently, as many as 20% of younger people are planning on leaving London entirely, as they simply cannot afford to keep spending so much of their money on rent costs alone.
Prices are likely to continue rising
As more and more people pile back into big cities following the mass exodus prompted by the coronavirus crisis, average monthly rents in London are predicted to continue increasing.
Speaking on behalf of Hamptons, head of research Beveridge said that the return to the new normal would most likely continue pushing average London rental prices higher.
“With COVID-19 being pushed further to the back of people’s minds, life in the capital is slowly returning to its new normal. Tenants are returning to the bright lights of the city, and this is driving rental growth to record highs,” she said.
“The rise of remote working means that fewer tenants are moving to the capital specifically for work. In fact, a growing number of tenants choosing to live in London are working fully remotely and could live nearly anywhere in the country. The footloose nature of many jobs today means that it will be culture and lifestyle rather than employment that become the capital’s biggest draw.”
“The current pace of London rental growth is predominantly down to the capital playing catch up with the rest of the country.”
“Today, the average rent in London stands 103% above the average outside the capital. While this gap is up from 96% a year ago, it remains below the 120–30% pre-COVID-19 premium, which has been eroded by strong rental growth outside the capital in recent years. But the current pace of rental growth in London is likely to push the premium closer to its pre-COVID-19 level within two years.”