Londoners now face even steeper living costs as home rental prices rocket in the capital
Rent prices in London have reached an eye-watering average of £2,000 per month, according to new research released by Rightmove.
The increase marks a year-on-year rise of 3.4%. In the previous quarter, the average rental price in the capital from January to March 2018 was £1,935. Rental costs in Greater London are now at the highest annual rate since 2014.
Outside of London, average rental prices only experienced an annual increase of 0.7%, growing to £795 per month.
READ MORE: The cheapest places to rent in the UK
Why has rent in London increased?
Rightmove says that the rise is fuelled by a shortage of housing choices for London renters. This has also led to a reduction in the time taken for landlords to find tenants to fill their properties.
“After a few years of more plentiful supply in the London market we’ve now reached a point again where competition among tenants for a great rental home can be very high in the most popular rental areas of the capital,” says Miles Shipside, Rightmove’s housing market analyst.
Another contributing factor is the recent reduction in tax breaks. In April 2018, the government announced that tax relief for buy-to-let landlords was to be phased out. Previous allowances meant that landlords were able to offset mortgage interest payments against their rental income. Now, buy-to-let tax relief for the 2018-19 tax year is restricted at 50%, leading to more and more landlords passing on extra payments to their tenants by raising rent.
Stamp duty increases introduced in 2016 have also seen landlords and second home buyers shouldering an additional 3% charge on property purchases.
Speaking to the Evening Standard, David Cox, chief executive of Arla Propertymark, commented: “Over the last years we’ve seen taxes to both purchase and let a rental property increase,” he said.
“We predicted back at the end of last year that renters would be in for a rough ride in 2018, and we warned the government about the impact on the market. Our fears are now being realised.”
Where are the cheapest areas to rent in London?
If you’re looking to escape the rental hike without leaving the city, then consider moving south. Data from onthemarket.com revealed that living as a group of four in Bexley, south east London, was the cheapest way to rent in the capital.
The average monthly rent in the London borough was calculated at £408.38 when divided between four tenants. According to the Government’s private rental statistics from April 2017 – March 2018, this comes in at 35% cheaper than the average London room price of £629 per month.
Going west could yield a healthier result for your bank balance too. Living as a group of three in Hillingdon breaks down at an average of £498.44 each.
READ MORE: Buy-to-let: 20 hotspots expecting the greatest price rises