Research by London lettings and estate agent, Benham and Reeves, has found that rental affordability across London has actually improved during the pandemic where the percentage of income required to cover rental outgoings is concerned.
Benham and Reeves analysed the rent to income ratio prior to the pandemic and found that across London, 64.4% of the average net monthly earnings was required to cover the average rent.
Benham and Reeves then analysed how this has changed based on the latest rental data combined with the latest earnings data from the ONS, whose estimates included furloughed employees and were based on actual payments made to these employees from company payrolls and the hours on which this pay was calculated.
The research shows that across London, this ongoing financial support via the furlough scheme and a reduction in the cost of renting means that the average London tenant is now paying just 60.2% of their income to cover the cost of renting; a -4.2% reduction.
This trend has been seen across 23 of the capital’s boroughs and in some cases, has been far greater. In Camden, the average tenant was required to spend 74.5% of their income on the cost of renting prior to the pandemic. Today, this rental cost requirement has fallen by a huge -12.1% and sits at just 62.4%.
Lewisham (-7.1%), Kingston upon Thames (-6.8%), Hammersmith and Fulham (-4.5%), Barking and Dagenham (-4.3%), Harrow (-4.1%), Hounslow (-3.6%), Ealing (-3.6%), Kensington and Chelsea (-3.2%) and Bromley (-3.1%) also rank amongst the boroughs to have seen the biggest reductions in percentage of net income required to cover rent.
However, this hasn’t been the case across the whole of the London rental market. In Islington, the average tenant is now spending 65.7% of their net monthly income on the cost of renting, a 5.7% increase since the start of the pandemic.
Haringey has also seen a sharp uplift, with 5.1% more of the average net income now required to cover the average rent.
Tenants in Wandsworth, Sutton, Greenwich and Tower Hamlets are also now paying between one and two per cent more of their income on rent, while Richmond, Lambeth and Southwark have seen the rent to income ratio remain largely unchanged.
Director of Benham and Reeves, Marc von Grundherr, commented:
“The pandemic has caused a large degree of financial instability for tenants and landlords alike and so the last two years have been far from smooth sailing for those within the London rental sector.
However, one silver lining to the ongoing uncertainty caused by Covid does seem to be an increase in rental affordability across much of the capital.
This has come about due to two driving factors. The first being a drop in demand which has caused many landlords to slash rents in order to secure a tenant and recoup some form of rental income.
The second has been the ongoing financial support of the furlough scheme which has made the difference between retaining employment and losing it for a great deal of people. As a result, they’ve been able to maintain some form of income, albeit at a lower level, and this has enabled them to cover the cost of renting.
As it stands, the cost of renting is more manageable now than it was two years ago and so those returning to the capital should be able to secure a decent rate of rent for the duration of their initial tenancy.
Of course, as we do return to normality, this growing demand is likely to bring rental prices back to their pre-pandemic highs and so any tenants with intentions of snagging a deal should act sooner rather than later.”
Location
Pre-Covid
Currently
Change in Rent to Income Ratio
Average Rent (Sep 2019)
Average Net Salary (Oct 2019)
Rent to Income Ratio
Average Rent (Sep 2020)
Average Net Salary (Nov 2020)
Rent to Income Ratio
London
ÂŁ1,697
ÂŁ2,634
64.4%
ÂŁ1,639
ÂŁ2,721
60.2%
-4.2%
Camden
ÂŁ2,536
ÂŁ3,403
74.5%
ÂŁ2,012
ÂŁ3,223
62.4%
-12.1%
Lewisham
ÂŁ1,324
ÂŁ2,316
57.2%
ÂŁ1,322
ÂŁ2,643
50.0%
-7.1%
Kingston upon Thames
ÂŁ1,390
ÂŁ2,778
50.0%
ÂŁ1,288
ÂŁ2,981
43.2%
-6.8%
Hammersmith and Fulham
ÂŁ2,117
ÂŁ3,215
65.9%
ÂŁ2,016
ÂŁ3,288
61.3%
-4.5%
Barking and Dagenham
ÂŁ1,194
ÂŁ1,805
66.2%
ÂŁ1,206
ÂŁ1,951
61.8%
-4.3%
Harrow
ÂŁ1,407
ÂŁ2,365
59.5%
ÂŁ1,445
ÂŁ2,611
55.3%
-4.1%
Hounslow
ÂŁ1,432
ÂŁ2,260
63.4%
ÂŁ1,416
ÂŁ2,370
59.8%
-3.6%
Ealing
ÂŁ1,463
ÂŁ2,422
60.4%
ÂŁ1,568
ÂŁ2,758
56.9%
-3.6%
Kensington and Chelsea
ÂŁ3,053
ÂŁ5,190
58.8%
ÂŁ2,977
ÂŁ5,349
55.7%
-3.2%
Bromley
ÂŁ1,321
ÂŁ2,779
47.5%
ÂŁ1,318
ÂŁ2,966
44.4%
-3.1%
Hillingdon
ÂŁ1,270
ÂŁ2,097
60.6%
ÂŁ1,244
ÂŁ2,162
57.5%
-3.0%
Hackney
ÂŁ1,834
ÂŁ2,363
77.6%
ÂŁ1,860
ÂŁ2,481
75.0%
-2.6%
Waltham Forest
ÂŁ1,309
ÂŁ2,268
57.7%
ÂŁ1,359
ÂŁ2,458
55.3%
-2.4%
Bexley
ÂŁ1,106
ÂŁ2,360
46.9%
ÂŁ1,113
ÂŁ2,498
44.6%
-2.3%
Redbridge
ÂŁ1,318
ÂŁ2,385
55.3%
ÂŁ1,311
ÂŁ2,465
53.2%
-2.1%
Brent
ÂŁ1,535
ÂŁ2,206
69.6%
ÂŁ1,494
ÂŁ2,195
68.1%
-1.5%
Croydon
ÂŁ1,136
ÂŁ2,262
50.2%
ÂŁ1,155
ÂŁ2,363
48.9%
-1.3%
Merton
ÂŁ1,530
ÂŁ2,787
54.9%
ÂŁ1,639
ÂŁ3,060
53.6%
-1.3%
Barnet
ÂŁ1,523
ÂŁ2,490
61.2%
ÂŁ1,485
ÂŁ2,476
60.0%
-1.2%
Enfield
ÂŁ1,310
ÂŁ2,132
61.5%
ÂŁ1,301
ÂŁ2,150
60.5%
-1.0%
Havering
ÂŁ1,169
ÂŁ2,309
50.6%
ÂŁ1,175
ÂŁ2,364
49.7%
-0.9%
Westminster
ÂŁ3,018
ÂŁ4,043
74.6%
ÂŁ2,822
ÂŁ3,803
74.2%
-0.4%
Newham
ÂŁ1,424
ÂŁ1,999
71.2%
ÂŁ1,476
ÂŁ2,083
70.9%
-0.4%
Southwark
ÂŁ1,654
ÂŁ2,711
61.0%
ÂŁ1,720
ÂŁ2,816
61.1%
0.1%
Lambeth
ÂŁ1,754
ÂŁ2,561
68.5%
ÂŁ1,961
ÂŁ2,838
69.1%
0.6%
Richmond upon Thames
ÂŁ1,857
ÂŁ3,749
49.5%
ÂŁ1,940
ÂŁ3,869
50.1%
0.6%
Tower Hamlets
ÂŁ1,803
ÂŁ3,159
57.1%
ÂŁ1,810
ÂŁ3,108
58.2%
1.2%
Greenwich
ÂŁ1,404
ÂŁ2,649
53.0%
ÂŁ1,494
ÂŁ2,755
54.2%
1.2%
Sutton
ÂŁ1,167
ÂŁ2,335
50.0%
ÂŁ1,133
ÂŁ2,206
51.4%
1.4%
Wandsworth
ÂŁ1,883
ÂŁ3,395
55.5%
ÂŁ1,948
ÂŁ3,393
57.4%
1.9%
Haringey
ÂŁ1,558
ÂŁ2,339
66.6%
ÂŁ1,644
ÂŁ2,292
71.7%
5.1%
Islington
ÂŁ1,914
ÂŁ3,193
59.9%
ÂŁ1,908
ÂŁ2,906
65.7%
5.7%
Data Sources
ONS Private Rental Market Summary
ONS Employee Earnings in the UK
Rent as a percentage of net income
ONS Private Rental Market Summary
ONS Employee Earnings in the UK
Rent as a percentage of net income
Change between rent to income ratios
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About the Author
Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents. With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from 21 prominently located branches and 14 international offices.