Rent in London up 25.9% since 2011 compared to 9.1% pay rises

Rent

£1,500 per month average rent for two bed flat in London: up 25.9% since 2011 compared to 9.1% pay rises GMB congress told

High rents are here to stay so as a direct consequence employers must be prepared to pay much higher wages to staff to enable them to afford these much higher rents GMB Congress told

A new study by GMB of official data shows that between 2011 and 2017 rent prices for 2 bedroom flats in London increased by 25.9% to an average of £1,500 per month, whilst over the same period, monthly earnings increased by just 9.1%.

In England as a whole, between 2011 and 2017, rent has increased by 18.2 percent, with the average 2-bedroom flat costing £650 per month. Meanwhile wages increased by just 9.8%.

In London, Greenwich is the borough that has seen the biggest rise in rent. Between 2011 and 2017 rent of a 2 bedroom flat increased by 50%, to an average rent of £1,350 per month. Meanwhile, wages in the borough increased by just 7.2%.

Other London boroughs with a significant gap between pay-rises and rent are; Newham, where rent increased by 47.4%, yet wages have increased by just 9.5%; Barking and Dagenham, where rent has increased by 42.4%, yet wages by just 16.4%; Lewisham, where rent has increased by 42.1% since 2011, and wages have increased by 16.8%; and Sutton, where rent for a two-bedroom flat has increased by 40.6% to an average of £1,195 per month, whilst wages have increased by just 10.3%.

The figures for the 33 London boroughs are set out in the table below. This is from a new study by GMB London Region of official data from the Office of National Statistics (ONS) for 33 boroughs in London. It shows the median rent of a 2-bedroom flat in 2017, the percentage change in rent-prices between 2011 and 2017, and the percentage change in monthly earnings between the 2011 and 2017. [See notes to editors for sources and definitions)

Warren Kenny, GMB Regional Secretary said:

“These official figures show increases in average rents for two bedroom flats of 30% or higher in 16 of the 33 London boroughs in the six years since 2011. The average increase for all the boroughs is 25.9%. By comparison average earnings in the same period rose by 9.1% in London. 

“In Greenwich rents went up by no less than 50% so that a two bedroom flat now absorbs about 70% of the average net pay of a resident in the borough.

“These high rents are here to stay. So too are younger workers living for longer in private sector rental accommodation. 

“As a direct consequence, employers must be prepared to pay much higher wages to staff to enable them to afford these much higher rents. 

“If employers don't respond with higher pay they will face staff shortages as workers, especially younger people, are priced out of housing market. 

“It makes little sense for these workers to spend a full week at work only to pay most of their earnings in rents.  They will vote with their feet. 

“Policy mistakes have made the housing position for lower paid workers worse. Council homes for rents at reasonable levels were aimed at housing the families of workers in the lower pay grades and did it successfully for generations.

“These were sold off -  but crucially not replaced as a matter of Tory dogma. Housing benefits was introduced instead to help pay rents for those on lower paid and the costs to the taxpayer has ballooned to over £24 billion a year. It would have been far cheaper to build the council homes. 

“The chickens are now coming home to roost on these policy mistakes. There is a massive shortage of homes for rent at reasonable rents for workers in the lower pay grades. There is now no alternative to higher pay to pay these higher rents plus a step change upwards in building homes for rent at reasonable rents. 

“Dogmatic opposition to allowing councils to build homes for rent is a luxury we can't afford. So too are plans by property developers and councils to demolish over 100 council estates in London and replace them with luxury housing.  

“Earlier this year ONS projected London's population growing to nearly 11 million by 2040. To make up for the current shortage of homes for rent at reasonable rents and to house this growing population is one of the most pressing challenges facing London.  Higher pay especially for younger workers is now one essential part of the solution."

ENDS

Contact: Keith Williams 07710 631 339 or Shaun Graham 07885 706 556 or GMB London Press Office 07970 114 762

Notes to Editors:

1 Source: Private Rental Market Summary Statistics; Valuation Office Agency © Crown copyright 2017.

The data is collected by the Valuation Office captured during the course of Rent Officers’ statutory responsibilities to administer functions related to Housing Benefit (LHA and LRR schemes) and Universal Credit on behalf of the Department for Work and Pensions.

Landlords and letting agents provide VOA Rent Officers with data about the properties they let. This information is captured electronically in the VOA’s lettings information database. Checks are carried out at the point of entry to ensure that any Housing Benefit funded tenancies are excluded from this database.

Two Bedroom self-contained properties with two bedrooms including houses, bungalows, flats and maisonettes.

2011 data is for the 12 months to the end of June 2011

2017 data is for the 12 months to the end of March 2017

2 Earnings data is from the Annual Survey of Hours and Earnings 2011 and 2017, Office for National Statistics. Monthly data is calculated from gross median annual pay for all full time employees by place of residence.