LONDON: London’s most desirable neighbourhoods are out of reach for all but the most affluent tenants, and the effects are rippling out.
A Bloomberg analysis of data from flat-share website SpareRoom shows the pinch is now being felt in the next tier, as people get pushed out of prime postcodes into places like Brockley and Bethnal Green.
The shift is starting to erase what’s left of affordability in the British capital.
“Usually what happens when people are squeezed is that rents fall fastest in the most expensive areas and rise quickest in the cheapest,” said Matt Hutchinson, director at SpareRoom.
“But what also happens is you get renters pushed a little further out of their preferred areas into slightly more affordable neighbourhoods.”
Those don’t stay affordable for long: the cost of a room in London is rising fastest in mid-priced areas where monthly rents range from £876 to £966.
On average, the cost of renting a room in these neighbourhoods increased 1.3% in the year through the third quarter, outpacing top-tier postcodes and contrasting with declines in the cheapest parts of London.
The findings shine a new light on the pressures facing tenants across the United Kingdom as they are forced to compete for a dwindling supply of homes.
The problem is most acute in London, where rooms cost around £1,000 a month on average, according to SpareRoom.
That’s adding to already high living costs and making it harder for aspiring homeowners to save for a deposit.
Take Clapham in South London.
It was once a prime target for young renters but is now off-limits for many, with average rooms now above £1,000 a month.
Those seeking a similar neighbourhood for less are moving to East Dulwich, four miles away, where prices are £183 cheaper – a saving of about £2,200 a year, according to SpareRoom.
The move towards mid-tier postcodes has sent prices soaring.
A room in Blackheath, a leafy south-east London neighbourhood, now costs £959 a month – up 9% year-on-year – the equivalent of an extra £950 in rent over 12 months.
It’s a similar story in nearby Brockley, where prices jumped almost 8% to £911.
By contrast, top-priced areas popular with university students and young professionals, like centrally located Camden, where a room sets back flat-sharers over £1,200 a month, recorded small declines over the same period, Spareroom said.
With even the cheapest rooms in London costing more than £700 a month, many are giving up on renting in the capital altogether.
SpareRoom said that demand has surged in commuter areas and suburbs such as St Albans and Brentwood.
Official private rental data shows a typical tenant household spent almost 42% of their income on rent in 2024, way above the English average of about 36%.
The figure was above 50% in four London boroughs – Westminster, Wandsworth, Camden and Hammersmith & Fulham –and almost 75% in Kensington & Chelsea, home to Britain’s priciest properties.
Landlords accuse the government of making the problem worse with costly regulations and now fear Chancellor of the Exchequer Rachel Reeves is set to impose National Insurance tax on rental income in her Nov 26 budget in a bid to repair the public finances.
Many are exiting the business and selling up.
“Because of chronic undersupply in the London rental market, rents are stubbornly high, and meeting affordability criteria – not spending more than 30% of your salary on rent – is rarely possible,” Hutchinson said.
“Hardworking people the capital relies on to function have little choice but to leave.” — Bloomberg
