Furloughed tenants in London spending 82% of income on rent
Em Morley - November 6, 2020
The continued level of unaffordability for tenants in London has been revealed by lettings and estate agent Benham Reeves, as the furlough scheme is extended.
Research from the agent shows the average London tenant was paying £1,644 a month in rent prior to the pandemic. They also earned an average net salary of £2,639, meaning 62% of their monthly salary was required to cover rent costs.
Under the latest version of the furlough scheme, which is a return to previous lockdown furlough scheme, employees will receive 80% of their current salary, up to a maximum of £2,500. As a result, London tenants who have been furloughed are seeing their net monthly income reduce to £2,003. This results in the average cost of rent requiring 82% of their monthly pay – a 20% jump compared to before the pandemic.
On top of this, Benham and Reeves also points out that in some boroughs the level of income required to cover rent costs for those on furlough has already exceeded 100%.
The London agent uses Westminster as an example. Here, the research shows that the average tenant surviving on furlough will see their monthly net income reduce from £4,038 to £2,003. Prior to the pandemic, 75% of monthly earnings were required to cover the average rent of £3,046 in the borough but tenants on furlough have seen this climb to 152%.
Tenants in Kensington and Chelsea, Camden, Hammersmith and Fulham and Islington have also seen the average cost of renting exceed 100% of the average income for an employee on furlough.
Marc von Grundherr, Director of Benham and Reeves, comments: “The outlook for London’s tenants is a tough one at present with a second national lockdown preventing many returning to work fully, if at all, while still having the struggle of paying rent and other monthly outgoings.
“While the Government has introduced a number of schemes to help lighten this financial burden it’s unlikely to be enough with many seeing the cost of rent alone swallowing the majority, if not all, of their monthly income.
“Of course, there will be those in a better position than the average tenant but it’s important to note that there will be many more that are worse off and facing an even tougher task.”
The average net monthly income in each borough, how this has changed for those on furlough, and the percentage of both required to cover the average monthly rent.
Average Rent pm
With Furlough Scheme in Place
Average NET Salary pm
Rent as % of NET salary
Furlough net salary – including cap due to gov max contribution