London rents soar by A THIRD in just three years as housing costs in capital leave rest of Britain standing

By Lee Boyce

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Tenants in Greater London are now paying an eye-watering 32 per cent in rent compared to October 2009, after the average cost increased again in the last year, figures show.

In the last 12 months, rental prices have raced ahead by six per cent - or twice the average rate of consumer inflation - to reach £1,240 per month, according to the HomeLet Rental Index.

As a result, renting a home in the capital is 16 per cent more expensive than in October 2010 and up 32 per cent higher on October 2009, when the average rent was just £940 per month.

Rental boom: Prices continue to soar in the capital. Pictured, flats in Highbury

Rental boom: Prices continue to soar in the capital. Pictured, flats in Highbury

The soaring price means the divide between London and the rest of Britain when it comes to renting a home has grown drastically.

The average rental cost across the rest of Britain increased by just seven per cent in three years, from £619 per month to £663 per month.

 

On average, tenants in the capital are paying almost double compared to those living in rental accommodation across the rest of Britain.

As a result, the average tenant outside of London is now paying £44 a month more compared to 2009 - but those in London are paying a staggering £300 more.

HomeLet says that people locating to London for employment is driving the increasing demand and is subsequently driving up average rents.

Regional breakdown of rental costs

House prices in the capital also continue to outperform the rest of the country by some way. This means many buyers are priced out of the market when it comes to London property, so the private rental sector is being strained.

London prices were up 5.5 per cent annually – more than twice as fast as the next highest rise of 2.3 per cent seen in the South East, according to the latest Halifax housing index.

The latest Land Registry figures also showed growth of 5.5 per cent in the last year in London, while Office of National Statistics had the growth at 6.3 per cent.

As property values in the capital continue to rise, many, especially potential first-time buyers, have been left floundering in rental accommodation.

High deposits and difficulties obtaining a mortgage remain major hurdles for many – and as rental costs continue to rise and create a further strain on finances, it becomes harder for those looking to get on the ladder to save.

Recent statistics from Rightmove found that one in four people looking to buy a property in the next year will be first-time buyers, down from ‘normal’ levels of roughly 40 per cent – mainly down to house values and high deposits.

Londoners do have a higher living rate – it was raised last week from £8.30 to £8.55 per hour compared to outside the capital, which increased from £7.20 to £7.45, but living costs in the capital, including rent, are much higher.

REGIONAL BREAKDOWN: HOW RENTS HAVE GROWN FASTEST IN LONDON

Region
October 2009
October 2010
October 2011
October 2012
London
£940
£1,064
£1,158
£1,240
Rest of UK
£619
£649
£664
£663
Overall
£679
£732
£763
£790


Ian Fraser, managing director at HomeLet, said: ‘Average rental prices in Greater London appear to be far more buoyant than the rest of UK – however, the continued increase in achieved rental values highlights the growing pressures on the supply and demand of rental stock in the capital.

‘London and the South East have the highest volume of private sector enterprises in the UK. As the competition for jobs and housing increases, the difference between average rental prices in the capital and the rest of the UK will continue to grow.’

 

The comments below have not been moderated.

Since the last change of government - social housing rents are up around 18%. In turn around 3 million social housing tenants are on HB, versus 1 million in private rentals. Majority of HB goes to social landlords, not private landlords, even allowing for rent differentials. Increases in Socail Housing rents are a deliberate government policy of CONVERGENCE - designed to achieve parity in social/private rents. With social rents going up twice as fast as private rents - that parity will be in around 15/20 years - in effect the end of social housing.

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Since the last change of government - social housing rents are up around 18%. In turn around 3 million social housing tenants are on HB, versus 1 million in private rentals. Majority of HB goes to social landlords, not private landlords, even allowing for rent differentials. Increases in Socail Housing rents are a deliberate government policy of CONVERGENCE - designed to achieve parity in social/private rents. With social rents going up twice as fast as private rents - that parity will be in around 15/20 years - in effect the end of social housing.

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If people on a low income can't afford to live and rent in London or the South east, how will those Private Sector Enterprises survive as many only pay the minimum wage, and who will work in those services that provide for the more well off in those areas? How can they employ a cleaner and pay them a low wage if that cleaner can't afford to live nearby? The same goes for restaurant workers, Hotel workers, Pub workers, Street cleaners, Bin collection, Health workers etc,etc. If this is what is termed social clensing in those areas then I think they might have shot themselves in the foot as those successful business people will not have the staff that helped them to achieve their wealth living within travelling distance to their enterprise. What is the true value of a mi££ion pound house if the streets are not kept clean?

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Why is everyone blaming this on housing benefit? I'm moving to London in January and that average is correct. But what you don't realise it that that price is usually split between two - four people. So most of the time it will be a single person paying £400 - £700 a month, not the whole £1300 themselves. London is packed full of people in their 20's sharing flats like this. Also unless a property is in an area where no one wants to live, landlords will not let to housing benefit, I know this because I have worked as an estate agent. If you don't believe me test for yourself. Call up any estate agent in London and ask if they have any properties where the landlord accepts housing benefit, you will find it very difficult. This is why they are moving housing benefit people out of London, because there are no more council owned properties available, and no private landlords wants anything to do with them.

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Move all households reliant on HB out of London to areas of cheaper rental and leave rental properties in London for those that work there reducing the need to commute. Of all the areas in this country where there is no excuse not to work, London must be the easiest place to get a job.

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Didn't Cameron tell us with the imposed housing benefit limit, that rents on average in London would reduce ? I suppose this was one more Tory guess. Dave, maybe if Mrs Thatcher hadn't stopped building council houses back in the eighties we wouldn't be ferrying people out of London to live elsewhere. - John Smith, West Midlands, 14/11/2012 9:29_________________-Get over it, that was 30 years ago. So funny when people still blame Thatcher who hasn't been PM since 1990 and we've had 4 more PM's since her

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It's crazy - you can rent a spacious 1 bed flat in Glasgow in a good area for the price of a tiny room sharing with complete strangers in London. It really is like a separate country. Do not envy Londoners.

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Those waiting for nominal HPs to fall in any radical sense will likely have a long wait. There will of course be a few forced sales, but those with little or no equity can not sell, and those with little or no mortgage have no need to sell. Those with little by way of wage increase can not afford to trade up, so relatively few properties will be available. As to what happens to those which are available, it's a moot point as to whether they end up as BTL or a family home.

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- Martinx9, London, United Kingdom, 14/11/2012 19:48. There are plenty cheap properties in London for first time buyers. Ex local authority housing is cheap and is a good start on the property ladder. But if first time buyers are looking for a riverside apartment or a place in W1, dream on, it's just not going to happen. You have to learn to crawl before you walk.

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Transfer families totally dependent on the dole to cities in the country side. Transfer Illegals to their country of Origin. The children of Illegals are Illegal too! - John Picarra , Lisbon, 14/11/2012 15:26 How dare you call any person, especially a child "illegal"? You must be a really evil small-minded idiot. Why don't you stay in Lisbon 'cos we don't want people like you in our country

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