Renters ‘must earn more than £75,000’ to afford to live in London

Renters in London must earn more than £75,000 to afford the average private rent in the English capital, new research has found, amid a warning that young families and key workers are being forced out.

Research from the G15, representing London’s biggest housing associations, found Londoners need to be earning £76,261 a year to keep up with rents in the English capital.

In London’s most expensive boroughs, salaries need to outstrip even the country’s top 10% of owners for renters to compete.

Tenants in London are seeing the biggest increases in the UK, according to the Office for National Statistics, with rents 9.7% higher than a year ago at an average private rent of £2,114 a month.

“London is built on a vibrant mix of people from all walks of life, but the capital is increasingly unaffordable for many,” said Fiona Fletcher-Smith, chair of the G15.

“A healthy London is one that provides room to grow for all Londoners. For key workers and young families to be locked out of many parts of the city is hugely damaging from a social and economic perspective.”

The amount of cash needed to keep up with rents differs across London’s 32 boroughs.

The G15 analysis looked at what tenants would have to earn to ensure rent covers no more than 30% of household incomes. The limit is widely considered the maximum renters should pay to live a healthy and affordable life and in many cases means a house share is the only option. 

The analysis found renters must be earning £124,240 a year to rent in Westminster or £101,599 in Hammersmith and Fulham.

Renters in Lambeth would have to earn £95,040 to keep up with the average while in Camden earnings would have to be £92,320 and in Wandsworth the mark is £89,639.

Tenants will have to earn between £70,000 and £80,000 to live in Islington, Hackney and Ealing while in Barking and Dagenham the salary required is £61,039 and renters in Croydon must bring home £55,440.

The G15’s Funding London’s Affordable Homes report found a household with an income equal to London’s median salary of £33,562 after tax) would pay £68% of their income on housing on average.

Using the example of two nurses on an average salary of £38,000, the report said the pair would be unable to afford market rents in 14 of 32 London boroughs.

Similarly, a young family with two adults each earning the average salary would find six of London’s boroughs out of reach for the average private rent without some sort of rent support.

In a bid to convince the government to invest in social housing, the report said building 289,000 homes for social rent would save Londoners £4.8bn in rent. It could also save the taxpayer up to an additional £3.5bn in housing benefits.

“Social housing is 70% cheaper on average than private market alternatives. Without it, London would be off limits to many people on medium to low incomes,” added Fletcher-Smith.

“With the government setting an ambition for 400,000 new homes in the capital, it is critical that our housing supports Londoners at all income levels. Social rent homes are a vital part of the mix, and housing associations are ready to work with the government to provide the affordable homes London and Londoners so desperately need.”

The Big Issue is among a number of housing organisations calling for more affordable and social housing to bring down record-high private rents.

Shelter has said 90,000 social rent homes are needed every year for the next decade to tackle the housing crisis.

So far, Labour has neglected to set a target for social housing as it looks to boost housebuilding to deliver 1.5 million homes while in power.

However, housing secretary Angela Rayner has called for a “council house revolution” and promised to prioritise social rent homes after bringing in mandatory housebuilding targets for local authorities to deliver 370,000 homes per year.

The Labour government is also set to introduce long-awaited rent reforms through the Renters’ Rights Bill.

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