London may be a safe haven for investors but for people needing to rent a property, living in the city is getting harder and harder. The average cost of renting a home in Greater London increased by 6.7 per cent over the past year to GBP 1,212 per month. With many unable to get on the property ladder in the capital, they have no choice but to scrape the bottom of their wallets to come up with the money, but the situation is undoubtedly putting strain on residents.
Rents in the capital are also driving up the national average, which now stands at GBP 777 per month, 4.5 per cent higher than in January 2012, according to the HomeLet Rental Index. When the rental sum for Greater London is removed, this figure drops to GBP 662 per month - arguably a much more manageable sum.
Ian Fraser, HomeLet managing director, commented: "Greater London has seen a greater annual increase in average rents than anywhere else in the UK. In contrast, our data shows tenants living in the capital have only seen their income increase by an average of 0.8 per cent. Therefore when the 6.7 per cent increase in renting a home is combined with the 2.7 per cent increase in inflation (according to the Office of National Statistics), the budgets of tenants in the Capital appear to be strained more than ever."
This spells bad news for landlords too, with tenants much more likely to migrate to peripheral areas of London in search of cheaper rents. While demand will always be there for prime stock, those with secondary or tertiary property could find themselves in hot water if rents continue to rise. Luckily, for now at least, tenants appear to keeping up with rents - just. The HomeLet Rental Index revealed that tenants in Greater London earn more than those living in any other region, averaging GBP 36,200 per annum. This is 41.1 per cent more than the lowest earning tenants in Northern Ireland.