The cost of renting a home in London has soared over recent years, with the price of a typical two-bed rising three times faster than average wages since 2011.
London businesses have been urged to up wages or face an exodus of employees looking for more affordable place to live after it emerged that rental growth had been significantly surpassing pay growth for the past six years up to 2017 – meaning renters are consistently forking out more and more money just to live in the capital.
An average two-bedroom flat in London now costs £1,500 a month, a 26% increase compared to 2011’s prices, while earnings had grown by just 9% over the same period – which is around three times slower. In almost half of London boroughs, rental costs had soared by more than 30% since 2011, and the rises are forcing people to rethink where they live.
Although the UK as a whole has seen a similar trend with rental growth far surpassing earnings rises, the problem is the most pronounced in the capital. In Greenwich, for example average rents have leapt by 50% during the time period, while salaries in the area have only gone up by 7.2% – meaning that paying rent eats away at around 70% of a local worker’s average wage packet.
Seeking a better balance
With the number of people in the private rented sector (PRS) continuing to rise, particularly in the UK’s major cities, many young professionals have already been looking outside the capital to places like Birmingham and Manchester, where property and rental prices are much more affordable and the job market is strong.
Warren Kenny, the GMB’s London regional secretary, commented: “It makes little sense for these workers to spend a full week at work only to pay most of their earnings in rents.
“There is a massive shortage of homes for rent at reasonable rents for workers in the lower pay grades. There is no alternative to higher wages to pay these higher rents, plus a step change in building homes at reasonable rents.”