Rental affordability in the capital has improved markedly during the pandemic according to London lettings agency Benham and Reeves.
The firm analysed the rent-to-income ratio prior to the pandemic and found that across London, in early 2020, some 64.4 per cent of the average net monthly earnings was required to cover the average rent.
Now, using the latest earnings data from the Office for National Statistics and today’s rent levels, the average London tenant is paying 60.2 per cent.
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 per cent of their income on the cost of renting prior to the pandemic. Today, this rental cost requirement sits at just 62.4 per cent.
Lewisham (down 7.1 per cent), Kingston upon Thames (down 6.8), Hammersmith and Fulham (down 4.5), Barking and Dagenham (down 4.3), Harrow (down 4.1), Hounslow and Ealing (each down 3.6), Kensington and Chelsea (down 3.2) and Bromley (down 3.1 per cent) also rank amongst the boroughs to have seen the biggest reductions in the 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 per cent of their net monthly income on the cost of renting, a 5.7 per cent increase since the start of the pandemic.
Haringey has also seen a sharp uplift, with 5.1 per cent 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.
Benham and Reeves director Marc von Grundherr says: “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.”
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