The word is out – the average monthly rent for a one-bed London apartment has inched closer to the £1,500 mark. This is not only shocking for Londoners, but provides adequate food for thought for the stakeholders of London housing, as this is not the direction they want the city to grow.
The figures released by Landbay for August show that the average monthly rent in the UK had reached £1,010 while the same for London was even higher at £1,467. If we map these to the disposable incomes of people, the rent accounts for more than half their earnings for homes outside London. The average disposable income of Londoners being £1,967, the average rent for one-bed apartment is almost three-quarters of their earnings.
As we continue to proclaim that London is the financial capital of Europe, these high rents can make the city unaffordable for working professionals. The intervention by the government, such as increase in the stamp duty on buy-to-let properties, does not seem to have had any desired impact. Tenants continue to pay high rents in London while their incomes have not climbed correspondingly in the same period and this has become a serious cause for concern.
This is also an eye-opener for many other sectors, as increased rents could prevent MNCs from deploying their staff from other countries in London for work on a long-term basis. It could also backfire on landlords in Central London if the rents continue to climb as the unaffordable rent could drive away tenants to outer areas of London.
The stakeholders of the housing sector have to consider the increase in rents in London as a hurdle to the growth of housing. A collective decision, including a well-thought out intervention from the authorities concerned, has to be taken in order to streamline the growth of rents in London. At the same time, the focus on affordable homes has to be sharpened if Londoners are to get homes at affordable prices.
The Mayor of London has already put a new team in place to tackle the housing crisis and this latest increase in rents will definitely not go unnoticed by them. The local authorities too can come up with innovative business plans to make housing affordable for all by partnering with the stakeholders.
If you’re interested in constructing affordable homes in the capital, contact us. We will help you identify projects with strong business potential and assist with property development in accordance with the local planning stipulations.
Photo Credit: Aftab Ali