Tenants in London are feeling the weight of exorbitant rental costs, with figures indicating that they are now forking out more than double the amounts paid by renters in other parts of the United Kingdom. A recent report from HomeLet (get the data here), an insurance provider, has revealed that in July, the average monthly rent in the capital surged to a staggering £2,109, in stark contrast to the national average of £1,037.
Unsurprisingly, Westminster remains the most unaffordable district within the city, with a typical home demanding an astronomical £3,360 per month, which is over three times the national average. It’s no secret that the London rental market is a costly endeavour, and the recent statistics only serve to underscore the financial pressures faced by Londoners.
The burden on tenants in London has been steadily mounting over the years. The report shows that tenants across the capital handed over an average of 38 percent of their gross household income to landlords in July, marking a significant increase from 31 percent six years ago. As London’s rental landscape becomes increasingly unaffordable, Croydon emerges as a relative oasis for those seeking more budget-friendly accommodation. In July, a typical Croydon property will cost tenants £1,471 per month, while a modern, amenity-rich studio apartment in Croydon can be secured for £1,600 per month inclusive of bills, making it the most affordable option in the city.
Richard Marsh, the owner of local estate agency Folklands, offered insight into the trend while speaking to the London Standard. He notes that a substantial portion of the individuals seeking homes in the south London borough of Croydon are relocating from more central areas such as Streatham, Brixton, Clapham, and Dulwich. Many of these individuals are driven to move due to rising rents or landlords selling properties. Croydon’s appeal lies in its affordability and excellent transportation connections, which make it an attractive option for those looking for quality living spaces without the steep price tag.
The increasing investor interest in Croydon is exemplified by the wave of build-to-let developments, including the Ten Degrees tower, which comprises 546 homes and stands 44 stories tall. Young professional couples looking to establish their first home together, often transitioning from shared houses in the SW and SE postcodes, are among those drawn to the area.
Redbridge and Waltham Forest are also among the more affordable areas in the capital to rent. In July, the average monthly rent in these regions was £1,590, making them a slightly more affordable alternative compared to other parts of London. However, over the course of a year, this still amounts to a substantial £1,428 more than the rental costs in Croydon.
Conversely, a corridor in west London, encompassing Hounslow and Richmond upon Thames, experienced the slowest growth in rental prices over the past year. Here, the typical rent increased by a relatively modest 7.6 percent to reach £1,920.
Despite these localized variations, the overarching trend across London is an increased proportion of household income being dedicated to rent. HomeLet calculates this on an individual tenancy basis, and the latest data suggests that this proportion is at its highest level since records began nine years ago. In stark contrast, in the North East of England, tenants typically need less than a quarter of their income to cover their tenancy bills.
Marcus Dixon, the director of UK residential research at property specialists JLL, warns that Londoners are likely to see an even greater share of their income allocated to housing in the foreseeable future. He notes that annual rental growth has consistently outpaced earnings growth since June 2021, indicating a trend that could persist for some time, further straining the finances of London’s tenants.
