London renters work over two months just to pay rent says Think Tank

London renters work over two months just to pay rent says Think Tank

9:18 AM, 17th July 2024, About 4 months ago 4

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A think tank claims renters are working harder than ever to pay landlords.

According to the Adam Smith Institute (ASI), renters in London are working 197 days of the year solely to pay their landlords.

The think tank warns the government must increase housing supply to tackle the demand backlog.

Renters still struggle to cover higher rent prices in London

The Adam Smith Institute (ASI) has introduced Cost of Rent Day, marking the point in the year when renters in England stop paying rent and start keeping their earnings.

According to the ASI, this year, the average renter in London worked until July 15th just to cover rent. From July 16th onward, renters finally start earning for themselves.

The average Cost of Rent Day in London falls on the 16th of July, more than two months later than the national average of May 5th.

The Adam Smith Institute points out that this big difference shows that even with higher salaries in London, renters still struggle to cover the higher rent prices in the capital.

To calculate Cost of Rent Day, the ASI divided annual rents by gross annual pay, determining the proportion of earnings spent on rent.

Rental crisis is even worse in the capital

James Lawson, chairman of the Adam Smith Institute, said: “We all know that rental costs in England are just too high.

“But alarmingly, as our research shows, the rental crisis is even worse in our capital city where Cost of Rent Day falls over 2 months later than the national average. This means that higher salaries, which many professionals have historically moved to London for in the first place, do not compensate for the higher rent prices that they face.

“Amid a cost of living crisis and nearly two decades of stagnation, London’s ‘Cost of Rent Day’ is a damning indictment on the performance of our economy, and our failure to match the demand for homes with supply in the capital.

“Concrete proposals to reform our sclerotic planning system and to deliver the homes we need must be an urgent priority for both the government and opposition parties.”

Increase housing supply

The Adam Smith Institute argues that directly punishing landlords or introducing rent controls will only worsen the situation for renters.

Instead, they urge politicians to focus on creating incentives for developers and landlords to increase the housing supply.


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Judith Wordsworth

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11:47 AM, 17th July 2024, About 4 months ago

Many many tenants, London or elsewhere, have lifestyle as their main priority. Takeaways/alcohol/ restaurants/ entertainment/ big TV/ all singing all dancing mobile phones/ Deliveroo etc etc etc are lifestyle

Call me old fashioned but maybe ought to go back to Roof over head / Bills / Food / lifestyle ???

Old Mrs Landlord

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12:16 PM, 17th July 2024, About 4 months ago

Yes, you're in danger of sounding as old-fashioned as me, Judith However, I think it should be noted that many young people in London rent in HMOs where rents are inclusive of bills which provincial renters pay separately, so this is not an exact like-for-like comparison.

JamesB

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12:45 PM, 17th July 2024, About 4 months ago

I think the headline is supposed to be over 6 months, not over 2 months?
Saying it is just to pay landlords though is nuts. It is to pay financing costs of making use of somebody else's invested capital. It is to pay the Govt for punitive unique taxation rules. It is to pay for the high labour costs of trades for maintenance of the building that they are making use of, and for all those who piggie back on landlords for various inspections and certificates etc- point being, the landlord is just a collection agent and doesn't see much of it.

PAUL BARTLETT

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20:48 PM, 17th July 2024, About 4 months ago

Reply to the comment left by Old Mrs Landlord at 17/07/2024 - 12:16
Further the LL owns the risk of gov.uk decisions on money supply / base rates while the T pays the same rent regardless, at least until the s13 becomes possible, yearly. So easy to see why rental insulates many from the risks of homeowners and LLs.

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