London rent is now so high that a woman on an average salary would need to double her pay to afford it.
The capital’s private rental market has exploded in recent months, with prices rocketing to their highest level against earnings in seven years, according to analysis by estate agents Hamptons International for Bloomberg News. In May, average rents across Greater London were 2,234 pounds, a 13% increase from the same time last year, the group said.
Women are hit particularly hard by these unanticipated jumps; average rental costs now eat up around two thirds of the earnings of a woman working full-time. The ONS considers rent to be affordable if it accounts for 30% or less of household income.
“Rising rents and somewhat stagnant wage increases have meant that for both sexes a larger proportion of their income is being eaten up by rent,” said Aneisha Beveridge, head of research at Hamptons.
The figures underline the crisis of affordability in London’s rental market just as the government is forced to reckon with spiraling anxiety among homeowners in the country. Mortgage costs in the country moved closer to a 14-year peak on Tuesday after the average five-year fixed-rate home loan climbed to 6.01%. The increasing rents also come as home builders have significantly slowed the rate at which they are building new homes anticipating weaker demand in the face of higher borrowing costs. This risks exacerbating the problem of demand outstripping supply.
To compound the pain in the rental market, price rises are outstripping wage increases, with rents growing faster than earnings for 21 months in a row, according to property portal Zoopla – and prices are still going up. “Rental inflation will only slow if we were to see a material increase in supply or weaker demand,” said Richard Donnell, executive director of research from Zoopla in the report.
“The latter seems unlikely given rising mortgage rates impacting first time buyers, the strength of the labour market, high immigration and upcoming busiest period for rental demand – between July and September.”
That’s squeezing women across the country, who are typically getting by on lower earnings due to the nature of their work in addition to the gender pay gap. Rents eat up almost half of a woman’s salary around Great Britain, compared to 40% for a man. The disparity grows in the capital.
Rental supply is also threatened as buy-to-let investors find themselves squeezed by rising interest rates and landlords blame a series of tax changes for making the sector less attractive.
Women have long paid more than what’s considered affordable in the private rental market. Over the last decade, there have been no regions of the country where rent levels were below 30% of income for women, except for Scotland and the North East of England.
The woes of the housing market are putting further pressure on both the Bank of England and the government to get the UK’s inflation under control.
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