Renters in the capital being priced out
Concerning data taken from a recent report suggests that London could be heading towards a labour crisis, with renters earning the living wage being priced out of the capital’s rental market.
Worrying
The report by flatshare website SpareRoom.co.uk suggests that those earning the London Living Wage of £9.15 per hour would need to spend more than half of their pay on rent. Typically, affordable rent is classed as lower than 35% of an individual’s net earnings. In the capital however, the average weekly income on the living wage amounts to £292.69 post tax and with room rents rising by 6% in the past year, renters are spending up to 56% of their net income on rental costs.[1]
As part of its research, SpareRoom looked at each postcode district in London and alarming found that none were classified as affordable under those on the London Living Wage. The cheapest postcode region in the capital, Thamesmead, where rents average rents total £480 per month and the second lowest region Edmonton (£505) were both still out of reach.[1]
Even more alarming was the news that renters living in a ‘W’ postcode area face rental costs of £810 per month, 14% than the average London rent of £712. For those on the Living Wage, a rental property here would see them spending 64% of their wages on rent.[1]
For those in the SW or SE postcode areas, rents typically cost £764 and £617 respectively, which would mean putting aside 60% and 49% for their accommodation. In N and NW postcode districts, rents command 50% and 57% of wages.[1]
The table below shows the difficulty for those earning the Living Wage in London and also highlights the plight of apprentices working in the capital:
Renters in the capital being priced out
| Area/Postcode | Average monthly room rent* | Room rent as % of monthly net Living Wage (£1,268) | Room rent as % of monthly net apprentice wage (£444) |
| London | £712 | 56.1% | 160.4% |
| SE | £617 | 48.7% | 139.0% |
| SW | £764 | 60.3% | 172.0% |
| W | £810 | 63.9% | 182.4% |
| E | £676 | 53.2% | 151.8% |
| N | £635 | 50.1% | 143.0% |
| NW | £721 | 56.9% | 162.4% |
Crisis point
Matt Hutchinson, director of SpareRoom.co.uk feels, ‘we’ve reached a point where the housing crisis is driving the lowest paid workers out of the capital. Even the cheapest way to rent, flatsharing, is officially unaffordable to them across the whole of London.’ He went on to say that, ‘the sad irony is those on the Living Wage are what keeps London ticking and they need to be able to afford to live in the city that depends on them. Rising rents are forcing many to live hand to mouth or increasingly, forcing them out. Apprentices are in an even worse position.’[1]
‘London is quite rightly celebrated for its vibrancy, diversity and creativity. To protect that we must make it affordable to live in, otherwise it’ll turn into nothing more than a theme park for the rich. The Government needs to take action to make sure the capital doesn’t face a labour shortage that could paralyse the heart of the British economy. An overwhelming 97%6 of renters in shared accommodation told us the Government isn’t doing enough to make housing affordable – it looks like they were right,’ Hutchinson concluded.[1]
[1] http://www.propertyreporter.co.uk/landlords/london-renters-on-living-wage-priced-out.html