More and More People are struggling on London Salaries
London is one of the most expensive European cities to live in; indeed the second most expensive in the entire world, after Tokyo. It is now said that to be able to have an average standard of living within the London area, a household income needs to be £3,250 per month. Despite London being the international hub of financial business, there are an increasing number of people who are struggling to manage as salary increases fall way below the rate of inflation.
The housing market seems to take the blame for everything and this is no different. As the housing market struggles to kick-start the economy with banks still cagey about lending to people, the rental market has seen an upturn and rents in London have risen by 7% in 2011. That rise alarmingly, is more than double the inflation rate of salary increases and one doesn’t need a calculator to work out that rental costs in London are increasing rapidly.
The typical average London income is said to be at £35,000. With rents costing households more than half their monthly income, it is becoming increasingly harder for people to manage to live and work in London.
A study by the homeless charity, Shelter,showed results that those families spending more than 35% of their monthly income on rent would guarantee that a family was struggling to survive on the average salary.
It would appear the rental sector in London is pretty much out of control and there seems to be little in the way of “fair” rents being demanded. The cost of an average family home in London in the private rental sector is £1,100 or thereabouts and there seems to be no sign of the rental market slowing down. Landlords are snapping up properties as the interest rate for lending is still favourable. As investments in buy-to-let properties are on the increase, the rents are soaring as landlords know demand is high. They can almost cherry-pick their tenants and London is slowly falling out of the average price range.
What Needs to Happen?
The Mayor of London, Boris Johnson, has stated many times that new homes need to be built in London and affordable homes, too. The “Homes for London” campaign is hot on the mayor’s list, yet nothing seems to be happening with capping the rental sector. Building homes takes time and in the meantime, young people who are starting out, with young families to keep are struggling to manage as they find it impossible to exist on their less-than-average salaries.
It is glaringly obvious that the rental sector needs some regulating and increases need to be addressed. With many young people turning to renting in the hope of saving for a deposit on the housing ladder, this is proving difficult. London is notorious for being expensive but it is not the housing market and rising prices for many families, it is the private rental sector which is causing families to live on the breadline.
The Deputy Mayor for housing in London has come out with a rather unhelpful statement. “There is little chance of rent controls being brought into London, so if people are paying more, then they should demand more”. That’s all very well, but it’s not solving the crisis that is being created by greedy landlords. There is little to be gained from people who are living on the breadline by shouting that they might need their wall painting on a more frequent basis. Richard Blakeway has also mentioned, again unhelpfully, that landlords could be forced to increase rental terms for longer than a six month period. Tenants must be jumping up and down in despair.
What is happening?
There is a glimmer of hope, but it’s a small glimmer. Rogue letting agencies are being forced to join an ombudsman scheme. This has been approved by the House of Commons. Baby steps as they say. But it clearly isn’t enough as families continue to struggle and rental arrears build up causing undue pressure on families.
The boil needs to be lanced and that is capping rents in London to enable those who the treasury rely on to kick-start the economy can afford to live. Currently, for every £1,000 of rent, £100 of that are rental arrears. The problem is percolating its way to many thousands of families throughout London. Rental caps are not seen as a way forward currently and as new homes being built are a slow process, it seems that people in London are destined to continue struggling.