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Pandemic Rent Squeeze – London Tenants See Better Value During Covid

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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.

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