The cost of renting in London has rocketed eight times faster than wages over the past year to a new all-time high, new research has revealed.
Last month the average monthly rent in London stood at £1106, a rise of 7.9 per cent in a year and the highest level ever recorded, according to the latest Buy to Let Index from lettings agency network LSL Property Services.
The increase compares with shop price inflation of 2.8 per cent and far outpaces the average rise in earnings, currently running at a meagre one per cent.
It means that £81 a more is being eaten up in rent on average in London at a time when salaries have barely moved.
David Newnes, director of LSL Property Services, owners of estate agents Reeds Rains and Your Move, said: “Rents in London are red-hot. With only modest improvements in the UK’s housing supply, rents will keep being forced upwards. Over the next few months it looks likely the Spring bounce will continue.”
The rise has hit the thousands of young working Londoners forced to rent far longer than they planned by the relentless surge in property prices and the scarcity of mortgages.
More than a quarter of Londoners now rent from private landlords compared with just 14 per cent in 1991 but many say they are now being priced out of the rental sector just as brutally as they have excluded from home ownership.
Union organiser Nell Andrew, 30, who earns almost £40,000 a year said she and her freelance illustrator partner are considering moving out of London because of their inability to escape “student level existence” after paying for the roof over their heads.
The couple pay £1300 a month for a two bedroom apartment in Stamford Hill, Hackney, but want a bigger place to start a family.
She said: “I find it difficult to be complaining. I am not in the worst situation; I am on a healthy wage but the point is that the rent and bills soak up half of my earnings. We don’t have money to save for a house and go on holiday abroad. People used to rent to save before buying but this is impossible for us.”
There are growing signs that tenants are struggling to pay the higher rents as they eat up an ever higher chunk of their take home pay.
For every £1000 owed to London landlords in rent last month, almost £100 was unpaid, twice the level of tenant arrears of just four months previously.
Campbell Robb, chief executive of housing charity Shelter, said: “The relentless rise of rents in the capital is putting more and more pressure on Londoners who are already fighting to stay afloat.
“Our research shows that nearly two thirds of Londoners are struggling or falling behind with their rent, leaving little left over for essentials let alone to save for a home of their own.
“Unfortunately, with so many priced out of homeownership and a shortage of new homes being built, it’s hard to see rents stabilising any time soon.”
Last week the Commons approved a Government clampdown on rogue letting agencies that will force them to join an ombudsman type redress scheme.
But agents said demand for flats and houses was still massively outstripping supply except in the most exclusive areas of central London, where rents have fallen slightly.
Lizzie Clifford, London lead manager at the National Housing Federation, said: “This is bad news for Londoners struggling to pay exorbitant rents, but it’s also bad news for the taxpayer – a chronic lack of affordable housing means more than a third of the housing benefit bill goes on private rent.
“Rents will continue to rise in London until we start building enough affordable homes. That won’t happen while this Government spends over £100bn on housing benefit in five years but only £4.5bn on building new homes.”