London Rents Become More Affordable After Covid

December 20, 2022
Posted in News
December 20, 2022 veps

Rented housing in London has become more affordable since the pandemic after a trend toward remote working allowed more tenants to live further from offices.

The portion of income people spend on rent declined to 39.8% last year from as much as 50.3% in 2017, the Office for National Statistics said Monday. While 2021’s reading is up slightly from the year before, it remains lower than the previous seven years.

The figures contrast with the experience of many renters and industry surveys, which show the cost of letting property is soaring and the number of places available is in such short supply that prospective renters must compete to secure a place to live.

Rent costs about £1,430 a month on average in the UK capital, almost double the level in the rest of England. But as a proportion of income, this is a substantially more affordable than the peak in 2017.

By contrast, rents in the south east of England in the 2021 financial year rose to a peak last seen in 2018, topping 30% of household income. The Humber in northern England saw the largest increase in 2021, reaching over 31%, up from around 24% in 2019, showing rising demand in areas outside the capital.

The data adds to evidence around the impact that the pandemic continues to have on tenants’ location preferences. Industry surveys show more people have a preference for space after the pandemic, and some are putting more emphasis on work-life balance.

This is having an impact on demand for London dwellings in both the rental and sales markets. Separate data from the ONS show that London house prices grew by the least out of other regions in the UK in October, at 3.5% year-on-year, compared to 9.5% growth in Northern Ireland.

That said, rental costs overall are still squeezing incomes by the most since the global financial crisis. Limited stock and high borrowing costs for landlords continues to push-up prices, with property portal Zoopla reporting that the cost of a new rental agreement rose 12.1% in the 12 months to October, far outstripping average annual wage growth of around 6%.

source: bloomberg