The least affordable areas for renters in London revealed

The insight comes from tenant and landlord service provider Canopy who have released their inaugural rental affordability index.

Overall, the outer Borough of Barnet came out as the least affordable area of London to rent in, with tenants here typically seeing nearly half (48.7 per cent) of their net (take-home) pay going on their rent.

The national average is around 10% less (38%), and the London average is 39.9 per cent. Barnet also had a high average monthly rental cost per named tenant at £1,281.

The North London town of Enfield came out as the second least affordable London area to rent in, with around 48.7 per cent of pay going on rent here. Dagenham, Harrow, and Barking made up the top five.

Overall, the average rent to income ratio in London was only just over the UK average (38 per cent). It took ninth place in the top ten table of UK cities with the highest rent to income ratio, with Bournemouth and Brighton taking the top spots.

Of all London areas, the rent to income ratios in Uxbridge and Bromley are the most in line with the UK average (both are around 38 per cent).

Using almost 50,000 data points, the Rental Affordability Index paints a comprehensive picture on the correlation between income and rental costs across the UK.

It shows that the majority of UK tenants have rental costs that are at the very limit of what experts believe is ‘affordable’.

The Canopy experts advise that spending around 30% of gross (pre-tax) income on rent is typically considered affordable, while 40% is at the outer limits of what many can make work. Most UK renters are currently going above this.

Across the UK, over a quarter (27.3 per cent) are spending at least half of their take-home (net) salary on rent.

In London specifically, 30 per cent of tenants are spending over half of their salary on their rent. In Barnet this was 38%.

Overall, Belfast came out as the most affordable major city for renters in the UK, with the average tenant spending just under a third of their take-home salary in rental payments (29.1 per cent).

Chris Hutchinson, CEO at Canopy, commented: “It is sobering to see that more than a quarter of UK tenants are spending the vast majority of their take-home salary on rental payments, and it neatly encapsulates the tricky situation that many tenants with aspirations of home ownership are in.

"According to our latest data, renters are spending 38% of their take-home income on rent vs 18% of homeowners paying mortgages. That highlights the financial pressures on renters, meaning less money is able to be saved to achieve their goals.

Despite the price stability that further regulation would have on the market, there would likely be additional disincentives for landlords, leading to more leaving the market, and therefore reducing rental housing supply, or those remaining being less inclined to adequately maintain their properties.

"Where we could see positive change is towards longer tenancies for those who desire them, fostering greater security for families and communities."

Find out more at https://www.canopy.rent/resource/our-first-rental-affordability-index-q1-2024.