The average monthly rental cost is increasing by the largest amount in three years.
Data from the April 2014 HomeLet Rental Index shows the average cost of renting a home in Greater London reached a new high, after increasing by 9.4% versus April 2013 to &1,348 per month. This is the largest annual increase in the capital’s average rental figure since April 2011 - meaning tenants in Greater London are currently paying rents almost double that of the rest of the UK (when the Greater London figure is removed).
The April report also shows tenants in Greater London are currently spending 57% of their income on rent (after taking Tax and National Insurance into account) – which is 9% more than three years ago. Average rents in the capital have increased by almost a quarter during this time (23.4%). In contrast, tenants’ average income has increased by just 4.2%.
Across the rest of the UK, the average cost of renting a home increased by 2.9% during April to &848 per month.
Martin Totty, Barbon Insurance Group’s Chief Executive Officer, said: “A recently released report published by Halifax (The Generation Rent Report 2014) shows almost half of this year’s respondents believe Britain will become a generation of renters within the next generation.
“Although perhaps unsurprisingly tenants in Greater London are paying much higher rents than anywhere else in the UK – they are also 57% higher than the region with the next highest average rents - the South East.”
“Demand for renting in the capital appears to remain strong across a diverse group of people – from young professionals to students. Whether average rents can continue to increase at this rate is unclear given the more modest rise in average incomes.”
“It may be the generally accepted relationship between rental values and income, which determines affordability, is less directly correlated in Greater London. The proportion of people who rent who are drawn from overseas who come to work or study for a period of time, may in part be responsible for the Greater London market behaving very differently to the rest of the UK.”
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