With the average asking price of a house in London at an all time high of £643,843, Londoners are having to privately rent for much longer than planned.
A new study by the Association of Residential Letting Agents (ARLA) revealed that the average Londoner will spend an incredible £68,300 on renting before buying their first house.
ARLA’s managing director David Cox has warned that London will become a city of renters by 2025, with just 40% of the population owning their own home.
He said: “We need to take action now, before we become a nation of forever renters.
“As rent costs continue to rise, unfortunately more and more tenants will find themselves renting for longer as they have less ability to save.”
Last year alone, Londoners spent on average 30% of their wages on rent, much higher than the national average of 16%.
Private renting is considered a cheaper alternative to buying property, but high demand means rent prices have now reached similar levels of unaffordability.
Erin, 25, who works in PR and marketing and has lived in London for almost seven years, has never thought about buying a house because of her financial situation.
She said: “I’d say maybe even more than 30% goes on rent, which when put down on paper is a nasty realisation.
“I wouldn’t pay high rent on a rubbish hole of a flat if I lived anywhere else.
“I love London; I can’t imagine living anywhere else.
“We’re here paying this cost because we want to and need to be here – it’s just shocking that landlords are taking advantage of that.”
“For me it isn’t the wages offered by employers that are the problem, it’s the developers and landlords making the big bucks.
“They have no consideration for Londoners.”
Ben who is 22 and works in London’s public sector also believes landlords can take advantage of people who live in London for their careers.
He decided to move to Kent and commute to work because London’s rental properties are not worthwhile value for money.
He said: “My biggest annoyance with cost of rent in London is that you actually don’t get very much.
“There was a tiny room in Wimbledon available recently that made the headlines, which had all the floor space taken up by a bed.
“I’m not able to live in such ridiculous conditions, which means I then have to spend an even more ridiculous amount just to have some floor space.”
“I did Economics as a degree subject so I understand the market forces of supply and demand.
“Yes there is high demand, but some landlords just take the mickey with the properties they offer.
Also cashing in on the high demand are estate agents, with a new one opening on the high street every 1.6 days according to online property agent HouseSimple.com.
During the last year, 13 estate agents opened in Hammersmith and Fulham, which makes for a 15.9% increase from the year before.
While Merton has only experienced a 3.2% increase, there are still 17 estate agents within just a quarter of a mile of Wimbledon Tube Station.
“Just one office can make hundreds of thousands of pounds in fees in a year”, said HouseSimple CEO Alex Gosling.
“London high streets are literally paved with property gold.
“It is now impossible to walk down a high street in London without passing an estate agent’s window.
“But Londoners will still be surprised to know there are almost 3,000 estate agents in the capital.”
Housing charity Shelter have investigated the instability associated with private renting in the city.
Their study, the largest of its kind in the country, reveals that over a third of renting Londoners have moved three or more times in the last five years alone.
This level of insecurity can have negative knock-on effects.
For example, more than 650,000 London renters have been forced to borrow money or find themselves in debt in a bid to finance expensive moving costs.
Mike, 34, is a palliative care nurse. He has had to move three times in London in the last two years alone.
He said: “I find the London rental market so frustrating that I’m leaving.
“I’ve had enough. It’s too much stress. It just feels like a constant fight.
“I’m a nurse, I pay a lot of my salary on rent and bills, and all we get from renting here is extortionate letting agent fees and charges on top of that.
“You always know when you leave a property that you’re going to get stung financially.
“Half the time it’s because while landlords are happy to put the rent up, they are not always prepared to fix things that go wrong.”
Shelter chief executive Campbell Robb believes the new Mayor of London must do more to support those like Mike who are struggling to cope with the unpredictability of private renting.
He said: “The capital’s sky high housing costs mean private renting is no longer just a temporary fix for most Londoners – it’s where millions of people have to live for the long-term.
“It’s shocking therefore that it is still not fit for purpose.
“With short-term contracts and sudden rent hikes making renters lives a misery, it’s no wonder that the vast majority are crying out for longer-term tenancies.
“It’s about time the capital’s 2.7 million private renters were given a better deal.
“The new Mayor can help to make unstable renting a thing of the past – so it’s up to every mayoral candidate to show they’re willing to fight for London’s renters.”
Labour London mayoral candidate Sadiq Khan has already outlined a policy for challenging ‘rip-off’ deposit fees on rental homes.
He said: “Londoners are having to take out loans or go into debt just to pay the huge initial rent costs.
“As Mayor, I’ll establish a London-wide not-for-profit lettings agency that will not only charge renters the true administration costs, but also drive up standards in London’s rental sector and provide greater stability for tenants.”
His Conservative rival, Zac Goldsmith, sympathises with those trapped in the private rental sector but criticised Khan’s proposals, describing them as unrealistic.
He said: “I don’t think rent controls work. The first thing it does is suppress the amount of homes that are built.
“Rent controls could only happen if the government agree to it, and they won’t.
“Sadiq Khan is offering an academic argument which is completely dishonest.”
Richard Lambert, chief executive officer, National Landlords Association, said: “While the demand for housing continues to outstrip supply of new homes there will be an upward pressure on rental prices, especially in high demand areas such as London.
“Rents have broadly risen in line with inflation over recent years, whereas salaries haven’t, and this puts even more pressure on people’s finances.
“Frustration at the affordability of housing is understandable, but the cost is high for everyone, whether you look to rent or buy. Focussing anger at landlords will achieve nothing and the only real solution is for the Government to incentivise the building of more homes to alleviate the pressure, especially in the capital.
“Overall 79% t of tenants are satisfied with their landlord and the English Housing Survey recently found that private rented tenancies now last four years on average, which is a far cry from the insecure and uncertain picture that is often painted of private renting.”
Image courtesy of Images_of_Money, with thanks