Renting in London:new report reveals £500-a-month rooms are 'on the verge of extinction' as demand continues to soar

New figures reveal that nearly half the rooms in London flatshares now cost more than £750 a month...

Five years ago, a third of the rooms available to rent in London were priced below £500 a month. However, thanks to soaring demand, just seven per cent of flatshares with London postcodes now cost less, prompting experts to warn that it won't be long before rooms at this price cease to exist.

New figures from flatshare website SpareRoom.co.uk reveal that the number of rooms priced above £1,000 a month in London has doubled since 2011, while more than 40 per cent of rooms cost tenants £750-plus.

While rents haven't increased quite so dramatically in outer London, the number of rooms at less than £500 a month has halved in five years. Most room rentals in the suburbs are advertised for less than £750 a month, but the number of properties advertised for more than that is seven times what it was in 2011.

Huge demand
“Rooms over the £1,000-a-month mark still only make up six per cent of the market in inner London, but that’s doubled in just five years,” says Matt Hutchinson, director of SpareRoom.co.uk.

"At the same time, rooms under £500 are heading rapidly towards the brink of extinction… huge demand for affordable accommodation still means many tenants are being priced out."

However, according to the Association of Residential Letting Agents, if migration numbers fall as a result of Britain leaving the European Union, rental demand in the capital is likely to weaken, which could lead to rent prices falling.

London compared to the rest of the UK
The average monthly rent outside London is £440, compared to £747 in the capital. Rent increases have cooled slightly this year, up by just 1.6 per cent compared to an 11 per cent hike in 2014-15.

Across Britain, renting costs in relation to earnings is more affordable today than in 2007. However, it is a very different story in London, where rent has risen 48 per cent in nine years and where the cost of renting a one-bedroom home takes up nearly 60 per cent of the income of the average full-time worker aged under 30.

The biggest increases over the past year have been in north London, home to established desirable areas such as Highgate, Hampstead, Muswell Hill and up-and-coming Finsbury Park. Rents have soared by six per cent since 2015 to an average of £743 per month.

Inner London
% of rooms advertised at May 2016 May 2015 May 2014 May 2011
         
£1,000+ per month 6% 6% 4% 3%
£750+ per month  42% 39% 28% 21%
>£750 per month 58% 61% 72% 79%
£500-£749 per month 52% 53% 57% 49%
>£500 per month 7% 9% 14% 30%

 

 

 

Outer London
% of rooms advertised at May 2016 May 2015 May 2014 May 2011
£1,000+ per month 1% 1% 1% 0%
£750+ per month  7% 7% 3% 1%
>£750 per month 93% 93% 97% 99%
£500-£749 per month 59% 53% 44% 27%
>£500 per month 34% 40% 53% 72%

 

 

 

 

 

 

 

A room in Barnes, in south-west London, now costs an average of £816 per month, following a 41 per cent rental hike, year on year.

The cheapest and most expensive areas in London

At £1,056 a month, South Kensington and Knightsbridge continue to be the most expensive London areas, while the cheapest is East Ham, an up-and-coming area in the borough of Newham with good links to Stratford and London City Airport, and where the average room rent is £508 a month.

The SE (South East London) postcode, which contains popular areas such as Lewisham, Southwark and Greenwich, is the only one where average monthly rents are still below £700.


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