Renting in the City: a trap without a door

The property market is facing its biggest challenge yet: to pull itself out of recession in a struggling economy and in the midst of a Eurozone crisis. While house prices have fallen across most of the country and sellers are rarely getting their full asking value, in the capital there is still a huge demand for property from overseas investors and young professionals and families looking to rent. This is keeping the letting rates in the City high, despite the tug on everyone’s finances for other day to day expenses. The problem people are facing today is either that they cannot afford to start renting in London or that they are currently renting there and are trapped by high costs and unable to save up for their first home. However, there are pockets of high value and low value properties across the city meaning that those willing to move in to less popular or more distant areas can find affordable rent.

There is quite a large discrepancy in rent prices between different boroughs of London. Most of us are aware of the extortionate prices paid for a place in Chelsea or Kensington, but may be pleased to know that in the accessible Bermondsey area you can find a 2 bedroom flat for £280 per week (pw) or less.  In Greenwich however, slightly further from the centre, a 2 bedroom apartment will more likely be £350pw while the equally distant but rather more fashionable area of Hampstead Heath has an average of £500pw for 2 bed properties.

The story for families is a little different but just as challenging. Four bedroom properties can reach well over £3000pw in Chelsea, with the average property costing £2000pw. In Finsbury and Clapham however, the average is more like £650pw, while Hackney (one of the cheapest boroughs of London) has a £500pw average. The idea of a family paying £500 per person per week (pppw) just to keep a roof over their heads is quite alarming. Fortunately, cheap rent does still exist in the less central districts which do still have a lot to offer in their small communities (eg. Schools, shops, bars and cafés) allowing a reasonable quality of life for those who manage their finances frugally.

Looking at the rest of the country highlights such a stark contrast in living costs that one wonders why people choose London at all. Based on monthly rental costs, the average for a 4 bedroom property in the whole of London is £4750 (to the nearest £10). The equivalent figure for Brighton, situated to the south and on the coast, is £1,600 which is identical in price to Oxford, a beautiful and historical city just an hour or two west of London. The shocking difference though is when you look North. While the cliché suggests that it is grim up there, the cost of property would make a southerner quite chirpy. In Manchester, a large and vibrant city, central 4 bedroom properties are on average £1000 per month, while in Leeds this drops to £880 and in Birmingham (admittedly the Midlands) is just £650. These are 3 of the largest cities after our capital, and work opportunities and social activities are just as exciting plus easy access to beautiful areas of countryside.

Ultimately, the big City will continue to suck people in, either unaware or unmoved by the high costs but drawn to the bright lights, fashion and culture. They enter at a great risk of becoming trapped in a cycle of high rent, high travel expenses and very little scope for saving for the future. Fortunately, with the help of the internet, people are able to search for the price which suits them and with a little planning and flexibility they can eventually save for a property of their own. 

Emily Banham has written this article on behalf of Summit Capital Mortgages, a leading provider of impartial mortgage advice in London and the South East, specialising in all types of a large mortgage loan and buy to let mortgages.