New research by tenant referencing specialist HomeLet shows that tenants in the capital are feeling the pinch more than ever.
The average rental price in Greater London increased to £1,202 in August, compared to £1,154 the previous month – a record breaking amount, despite continual economic instability, according to the company.
This is an increase of 12.2% compared to the same time last year, suggesting demand for rental properties in London is on the up as people remain unable to get onto the property ladder due to lack of mortgage availability and rising house prices.
Over the same period, the average salary of tenants in the region has increased by just 2.4%. This large gap in rental and salary increases indicates how London residents are feeling the squeeze. Although this means many tenants are experiencing financial strain, landlords are benefiting from the increasing rental income.
Another statistic from the August HomeLet Rental Index shows that the average tenancy length in Greater London dropped in the last two years from 27 months to 22 months.
John Boyle, managing director of HomeLet, said: “Tenants in the Greater London area are stretching their budgets more than ever, not only due to an increase in rental costs, but also rising energy costs following the announcement by utility companies that gas and electricity prices are set to soar even higher. This isn’t a good sign for some tenants who may struggle as winter approaches and the cost of running a home increases even more.
“Despite increasing rents due to high demand, the private rented sector is still offering a stable alternative to home ownership. Whilst many tenants are still renting because they can’t afford to buy, an increasing number of tenants are choosing to rent for the long term because of the flexibility that that it offers.
“The decrease in tenancy lengths would indicate that tenants are starting to move more frequently again. And we can expect tenancy lengths to decrease in 2012, as the level of high value short term rentals increases in 2012 during the Olympic Games, which is positive news for letting agents.”