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London tenants seeing ‘more manageable’ rent prices during pandemic

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Tue 01 Jun 2021

London tenants seeing ‘more manageable’ rent prices during pandemic

London has become a more affordable place to rent during the pandemic, according to research by London lettings and estate agent Benham and Reeves.

Benham and Reeves analysed the rent to income ratio prior to the pandemic and found that across London, 64.4% of the average net monthly earnings was required to cover the average rent.

The agent also analysed how this has changed based on the latest rental data combined with the latest earnings data from the ONS, whose estimates included furloughed employees and were based on actual payments made to these employees from company payrolls and the hours on which this pay was calculated.

The research shows that across London, this ongoing financial support via the furlough scheme and a reduction in the cost of renting means that the average London tenant is now paying just 60.2% of their income to cover the cost of renting.

This trend has been seen across 23 of the capital’s boroughs and in some cases has been far greater. However, areas such as Islington and Haringey have seen rent increases.

  Pre-COVID     Currently      
Location Average Rent (Sep 2019) Average Net Salary (Oct 2019) Rent to Income Ratio Average Rent (Sep 2020) Average Net Salary (Nov 2020) Rent to Income Ratio Change in Rent to Income Ratio
London £1,697 £2,634 64.4% £1,639 £2,721 60.2% -4.2%
Camden £2,536 £3,403 74.5% £2,012 £3,223 62.4% -12.1%
Lewisham £1,324 £2,316 57.2% £1,322 £2,643 50.0% -7.1%
Kingston upon Thames £1,390 £2,778 50.0% £1,288 £2,981 43.2% -6.8%
Hammersmith and Fulham £2,117 £3,215 65.9% £2,016 £3,288 61.3% -4.5%
Barking and Dagenham £1,194 £1,805 66.2% £1,206 £1,951 61.8% -4.3%
Harrow £1,407 £2,365 59.5% £1,445 £2,611 55.3% -4.1%
Hounslow £1,432 £2,260 63.4% £1,416 £2,370 59.8% -3.6%
Ealing £1,463 £2,422 60.4% £1,568 £2,758 56.9% -3.6%
Kensington and Chelsea £3,053 £5,190 58.8% £2,977 £5,349 55.7% -3.2%
Bromley £1,321 £2,779 47.5% £1,318 £2,966 44.4% -3.1%
Hillingdon £1,270 £2,097 60.6% £1,244 £2,162 57.5% -3.0%
Hackney £1,834 £2,363 77.6% £1,860 £2,481 75.0% -2.6%
Waltham Forest £1,309 £2,268 57.7% £1,359 £2,458 55.3% -2.4%
Bexley £1,106 £2,360 46.9% £1,113 £2,498 44.6% -2.3%
Redbridge £1,318 £2,385 55.3% £1,311 £2,465 53.2% -2.1%
Brent £1,535 £2,206 69.6% £1,494 £2,195 68.1% -1.5%
Croydon £1,136 £2,262 50.2% £1,155 £2,363 48.9% -1.3%
Merton £1,530 £2,787 54.9% £1,639 £3,060 53.6% -1.3%
Barnet £1,523 £2,490 61.2% £1,485 £2,476 60.0% -1.2%
Enfield £1,310 £2,132 61.5% £1,301 £2,150 60.5% -1.0%
Havering £1,169 £2,309 50.6% £1,175 £2,364 49.7% -0.9%
Westminster £3,018 £4,043 74.6% £2,822 £3,803 74.2% -0.4%
Newham £1,424 £1,999 71.2% £1,476 £2,083 70.9% -0.4%
Southwark £1,654 £2,711 61.0% £1,720 £2,816 61.1% 0.1%
Lambeth £1,754 £2,561 68.5% £1,961 £2,838 69.1% 0.6%
Richmond upon Thames £1,857 £3,749 49.5% £1,940 £3,869 50.1% 0.6%
Tower Hamlets £1,803 £3,159 57.1% £1,810 £3,108 58.2% 1.2%
Greenwich £1,404 £2,649 53.0% £1,494 £2,755 54.2% 1.2%
Sutton £1,167 £2,335 50.0% £1,133 £2,206 51.4% 1.4%
Wandsworth £1,883 £3,395 55.5% £1,948 £3,393 57.4% 1.9%
Haringey £1,558 £2,339 66.6% £1,644 £2,292 71.7% 5.1%
Islington £1,914 £3,193 59.9% £1,908 £2,906 65.7% 5.7%
Data Sources ONS Private Rental Market Summary ONS Employee Earnings in the UK Rent as a percentage of net income ONS Private Rental Market Summary ONS Employee Earnings in the UK Rent as a percentage of net income Change between rent to income ratios

Marc von Grundherr, Director of Benham and Reeves, comments: “The pandemic has caused a large degree of financial instability for tenants and landlords alike and so the last two years have been far from smooth sailing for those within the London rental sector. 

“However, one silver lining to the ongoing uncertainty caused by Covid does seem to be an increase in rental affordability across much of the capital.

“This has come about due to two driving factors. The first being a drop in demand which has caused many landlords to slash rents in order to secure a tenant and recoup some form of rental income.  

“The second has been the ongoing financial support of the furlough scheme which has made the difference between retaining employment and losing it for a great deal of people. As a result, they’ve been able to maintain some form of income, albeit at a lower level, and this has enabled them to cover the cost of renting.

“As it stands, the cost of renting is more manageable now than it was two years ago and so those returning to the capital should be able to secure a decent rate of rent for the duration of their initial tenancy. 

“Of course, as we do return to normality, this growing demand is likely to bring rental prices back to their pre-pandemic highs and so any tenants with intentions of snagging a deal should act sooner rather than later.”