A Quarter of London Tenants Still Spend Over Half their Wages on Rent

A quarter of London tenants are still spending over half of their wages on rent, despite prices falling by an average of 1% at the end of last year.

The latest rental report from Spareroom.co.uk found that the average room rent price in the capital dropped from £755 a month to £748 at the end of 2016.

Rents in the capital widely stagnated over the past year, as an increase in the number of available homes provided London tenants with more choice and opportunities to negotiate.

A Quarter of London Tenants Still Spend Over Half their Wages on Rent

“Falling rents in London might sound like good news for renters, but they’ve got a long way to go before they’re genuinely affordable,” says the Director of Spareroom, Matt Hutchinson. “One in four house sharers now spends over half their salary on rent.”

Nowhere highlights this more than in the London areas where rental properties are in short supply. St Paul’s, in EC1, is the most expensive part of the capital for London tenants, with rents averaging £1,346 per month. This is almost three times more expensive than London’s cheapest postcodes, which are typically found in up-and-coming areas on the fringes of the capital.

The cheapest postcodes for London tenants 

North London dominates the list of top ten postcodes for the cheapest homes, with rooms in Zone 4’s Upper Edmonton the least expensive of all, at an average of £530 a month.

Meanwhile, rooms in leafier and slightly further out locations, such as Winchmore Hill and Totteridge & Whetstone, cost renters £559 and £565 respectively.

Rent prices dropped by up to 5% in all but two areas on the list – Lower Edmonton in north London and Abbey Wood in southeast London, a soon to be Crossrail hotspot, where room prices have increased by 4%, to £541 per month.

However, as London tenants seek cheaper alternatives, demand in more affordable locations surges and prices are likely to rise in line with demand.

“As 2016 came to a close, we saw London rents peak and renters look to commuter towns around the capital instead of concentrating on central locations, as we’ve seen in the past,” Hutchinson comments.

London’s fastest rising postcodes

With rent rises of 8%, north London’s Southgate, in Zone 4, and southeast London’s East Dulwich, in Zone 2, are among the fastest rising postcodes in the capital.

East Dulwich is benefitting from the recent Overground extensions through Forest Hill on one side and Peckham on the other, which have led to southeast London increasing in popularity, and room rates rising accordingly, to an average of £662 a month.

Hutchinson adds: “The SE postcodes are still the cheapest in the capital, so are proving popular with young professionals looking for a balance of lifestyle and affordability.”

Southgate, at the top end of the Piccadilly Line, is starting to see an increase in demand, as rents in more central locations are pushing London tenants’ affordability to breaking point. Room rents of £613 are a much more appealing prospect, as is having a better change of getting a seat on the Tube!

Landlords seeking investment properties in the capital should look to the areas that still prove affordable for average London tenants – you will be guaranteed a high level of demand and strong capital growth in areas undergoing improvements.