New record high for renting in London (but nice restaurants)
Published by Brian Church for 24dash.com in Housing
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Tenants living in London are now paying almost double the amount of rent compared to the rest of the UK, and almost two thirds of their income on rent, according to new research.
The September 2013 HomeLet Rental Index shows the average cost of privately renting a home in Greater London increased by 1.6% during September to £1,337 per month. This is also 4.8% more expensive than the same time last year, and a new record high.
However, around the rest of the UK, this month’s HomeLet Rental Index reveals the average cost of renting a home decreased by 1.8% to £696 per month (when the Greater London figure is removed).
This means Greater London is a significant 92.1% more expensive than the rest of the UK - the highest difference on record.
Gary Abraham, HomeLet’s sales and marketing director, said: “At £1,337 per month, average rents in the capital are not only almost double than the rest of the UK’s (when the Greater London figure is removed), but also a massive 163.2% more expensive than in the least expensive region, the North East.
“With an average annual income of £36,000, Greater London tenants earn 56% more than those in the North East. When we take into account this month’s record rental amount in the capital of £1,337 per month, and take off typical pension contributions and student loans, a tenant renting on their own could spend a substantial 66.7% of their net income on rent."
Within other UK regions, Wales saw the largest monthly and annual increases in average rents of 4.1% and 7.2% respectively. It currently costs an average of £614 per month to rent a home in Wales, which is the highest average amount seen in the region.
The North East was home to the largest monthly and annual decreases in average rental amounts of 3.2% and 2.5% respectively. After reducing during September to £508 per month, average rents in this region have not been this low since February 2013. It is also the second consecutive month the North East has seen the most significant monthly drop in average rents.
Abraham said: “The introduction of mortgages tailored towards the second phase of the ‘Help to Buy’ scheme, which was launched this week, could discourage people to either remain in, or move into, rented homes. This isn’t surprising when a prospective tenant in Greater London for example would need almost £3,500 upfront just to move into a new rented home (based on the landlord asking for six weeks’ rent in advance as a deposit and the first month’s rent).
“More people signing up to the ‘Help to Buy’ scheme could lead to less people choosing to rent which may then cause a reduction in the demand for rented homes and a subsequent deflation in rents. This month’s HomeLet Rental Index does show a decrease in rents, which could be linked to an annual trend. However, it may also be the result of the first surge of people taking advantage of the first phase of ‘Help to Buy’ that was introduced earlier this year.
The HomeLet Rental Index website, www.homelet.co.uk/rentalindex