The average rent for a two-bed home in the capital will hit £2,007 a month by January 2020 if rents continue to rise at their current pace. That would mean a single earner household would need to earn almost £120,000 a year for their rent to be affordable by 2020.
New analysis of Valuation Office Agency data by myself has found that the average private rent for a 2-bed home grew by 0.42% a month between November 2004 to March 2015. That means that the average rent for a 2-bed London home in 2015 is now £7,700 a year more than in November 2004.
Modelling, based on the average rate of rent inflation over the past 11 years found that if the rate of rent growth continues the average 2-bed private rent in London will hit £2,007 a month in January 2020 with a one bed property hitting £2,010 by 2025.
Assuming housing charity Shelter’s rule that a household should not spend more than a third of their net income on rent, it is estimated that by 2020 a single earner household would need a pre-tax salary of £118,240 to afford the average two-bed flat in the capital. If the rent was split evenly between two earners, each would need a salary of £49,655 per year. The median London income is currently £35,069.
Average private rents for three and four bedroom homes in London have already broken the £2,000 barrier but if the trend continues, by 2025 a privately rented three-bed home in the capital would cost £3,531 a month, with four bed properties on average costing £5,606.
I believe the next Mayor should look at steps to limit rent rises in the capital saying “there’s no way that rents consistently rising faster than wages is sustainable in the long term.”
These figures show just how broken the London rental market has become. We desperately need to call time on ever increasing rents, which are driving many people into poverty or out of the capital altogether.
There’s no way that rents consistently rising faster than wages is sustainable in the long term.
Most other western economies exercise some form of regulation over rent increases, some of which have larger and better functioning private rented sectors than we do in London. With the number of private renters in the capital due to overtake the number of home owners, it’s about time the capital followed suit and gave private tenants the security and certainty that they deserve.
The next Mayor of London has a mammoth task to get London’s housing market under control. What’s clear is that Boris Johnson’s soft touch approach to housing has seen rents rocket and standards deteriorate, pricing many low and middle income people out of the capital.