The August 2013 HomeLet Rental Index
shows the average cost of renting a home in Greater London increased by 1.5% during August to £1,316 per month – the third consecutive monthly all-time-high.
In contrast the average amount tenants in Greater London earn dropped slightly during the past year by 0.8% to reach £35,200 – this is only 0.6% higher than August 2010 – or just £200 more.
This month’s HomeLet Rental Index shows not all areas of the UK saw increases though - five of the 12 regions saw decreases in average rental amounts. The North East was home to the most significant, where the average cost of renting a home decreased by 6.9% during August to £525 per month.
The overall UK average monthly rental amount now stands at £851 after increasing by 3% over the same period - another record amount.
Gary Abraham, Sales and Marketing Director for HomeLet, said: “The disparity between income and rental values shown within the August 2013 HomeLet Rental Index highlights the difficulties many tenants are facing at the moment. If we look at potential take home pay, factoring in pension payments and student loans, a tenant with an average wage in London could pay over 65% of their net income on rent, if they wanted to live alone.
“With inflation rates remaining above the Bank of England targets, it’s not surprising London has the highest number of tenants per property (at 2.1 people per rented home) and, on average, is home to the youngest tenants in the UK (aged 30.6 years. The national average is 32.5).
“At current rental values, if a landlord asked for six weeks rent in advance as a deposit and the first month rent, tenants could need over £3,000 before they move into a property. Whilst younger tenants may be more willing to share a rented property – families and lower income households could increasingly be priced out of the Private Rented Sector in desirable areas.
“With house prices rising and pressure building on social housing, the private rented sector will continue to expand and play a more predominant role in the Capital’s housing supply chain for the foreseeable future.
“If initiatives like the Build-to-Rent housing scheme begin to increase the volume of private rented stock, we will hopefully see more incremental and sustainable growth in rental values. If not we may begin to see more proposals from Government that impact both the private and social rented sectors in the Capital.”