Cash-strapped graduate tenants renting in London are spending more than 45% of their take-home pay every month on rent payments, according to the latest Landbay Rental Index, powered by MIAC.
As thousands of graduate tenants across the country flock to the capital to begin their first jobs this month, many will be seeking the most affordable rents possible.
Despite London’s infamously high rents, the capital is home to a quarter of all new graduates who move within six months of finishing their degrees.
Those hoping to rent alone in London face spending 73% of the average post-tax monthly income of £1,972 on £1,445 of rent. In a shared house of two graduate tenants, overall rent of £1,917 per month would eat into 49% of each tenant’s income, while those living in a three-bedroom property would each spend 45% of their monthly take-home pay on rent of £2,683.
Of all London boroughs, the most affordable average rents are found in Bexley (£1,004), Sutton (£1,506), Havering (£1,072), Croydon (£1,125) and Bromley (£1,169).
Bexley has recorded the strongest rental growth of all boroughs, with an average 1.98% rise in rents over the past year; growing demand for properties in outer London has clearly already affected these regions.
For those seeking greater proximity to the City of London, Lewisham is the most viable option. An average rent price of £1,232 per month makes it the eighth most affordable London borough, while its 15-minute train journey to the City makes it attractive to graduate tenants.
At the other end of the spectrum, the most expensive average rents are unsurprisingly found in more desirable boroughs. Kensington and Chelsea (£3,042), the City of Westminster (£2,891), Camden (£2,219), the City of London (£2,074), and Hammersmith & Fulham (£1,886) are the most expensive areas to rent, with prices being well out of reach for those on a starting salary.
It’s telling that all five locations have seen rents drop over the past year, by an average of 2.36%, 2.38%, 1.13%, 2.35% and 1.67% respectively, as prime locations have suffered a fall in demand in both the sale and rental markets.
The CEO and Founder of Landbay, John Goodall, says: “Faced with record high student debt levels and the rising cost of living, it will be little surprise to see graduates starting to look elsewhere from the traditional young professional hotspots, such as Fulham and Camden, when they come to London. Surrounding areas are clearly worth the longer commute to reduce the rent burden and give them any hope of saving for a deposit on a house of their own one day.
“There are, of course, a number of factors at play, but, as returns fall in the more central locations, landlords may look to the outer boroughs to seek more attractive yields.”
Any landlords considering letting to graduate tenants in London should consider the top locations highlighted from Landbay above, in order to achieve strong rental growth and high demand.