20%
30%
1
2
3+
Long-term stability
The affordability ratio has not altered
significantly over the last 15 years. In
particular, it has remained largely
unchanged over the last couple of years.
It is on a par with the level reached in
2015/2016 when household incomes
were also squeezed, albeit within a
different market backdrop. Despite
rapidly rising rents, the affordability ratio
actually fell slightly in London in the first
half of 2022, suggesting that growing
incomes are cushioning some of the
increase in rent. We have also seen
renters change their requirements, taking
smaller properties or looking in different
locations which could be, in part,
influenced by affordability considerations.
Keeping to a budget
Average tenant affordability in London has not
exceeded 30% and is unlikely to do so in 2022,
despite rental rises. Rising costs of living are a
real concern, but tenants would be unable to
secure tenancies if income was stretched too
far. Were affordability constraints having a
significant impact, we would expect to see a
drop-off in demand rather than the record
levels currently being experienced.
Renters' budgets have risen to match
theincrease in rents but they are not
overstretched. In 2019, Foxtons renters
paid, on average, 100.4% of their
budgeted amount, yet so far in 2022, this
is just 95.8%. Budgets are least constrained
for renters of smaller flats, with those
renting studios paying around 93% of
their initial budget.
THE RISING COST OF
LIVING IS A CONCERN
FOR RENTERS ACROSS
THE UK. LONDONERS
APPEAR TO BE SHOWING
RESILIENCE, BUT WE
WILL BE MONITORING
THIS CLOSELY.
RENTER
AFFORDABILITY
4 London Lettings Report Summer 2022 | Affordability
The general consensus is that a property is deemed affordable if occupiers
spend up to 30% of their income on their housing costs. Assessing renters'
actual incomes and the rent for which they are personally responsible, we see
that private renters in London spend, on average (median), 29.7% of their gross
income on their rent, slightly less than in 2021.
RENTERS ARE SPENDING
29.7% OF THEIR GROSS
INCOME ON RENT
IN 2022
DRMA, median % of gross
income paid on their rent share
Dataloft Rental Market Analytics, showing median level of
gross income spent on rent for new tenancies. 2022 is H1
Foxtons
LONDONERS' RENT SPEND
- AVERAGE PROPORTION
OF GROSS INCOME
92.9%
94.2%
96.6%
98.9%
97.1%
26.6%
25.4%
26.0%
26.4%
27.4%
27.8%
28.6%
29.4%
29.5%
28.4%
27.7%
28.2%
29.4%
29.9%
29.7%
2008
2016
2009
2017
2010
2018
2011
2019
2012
2020
2013
2021
2014 2015
H1 2022
Studio
1 bed flat
2 bed flat
3+ bed flat
House
% OF INITIAL
BUDGET
PAID BY
FOXTONS
RENTERS
IN 2022