Revealed: The real affordability gap between budgets and monthly room rents for every London borough

The staggering scale of the housing affordability gap for renters in London is revealed in new analysis which shows the gap between renters’ budgets and the average asking rent in every borough.

Research by insurance giant Admiral using data from SpareRoom reveals the huge gap between what Londoners think they can afford in rent and the current reality of the rental market in target areas.

In Westminster, the average budget of room hunters (£990) was a staggering £562 a month, less than the typical asking rent in July (£1,552).

A shortfall of more than £100 a month was found in almost half of the 32 boroughs analyzed, including Hounslow, Hillingdon and Lambeth.

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In just three areas – Bexley, Waltham Forest and Richmond-upon-Thames – tenants had average budgets that exceeded typical rents.

Meanwhile, in Westminster, 97% of people using SpareRoom to find a place to call home had a below-average budget of £1,552 for room rent.

In Camden, 95% were priced out, while nine out of 10 people looking for a room couldn’t afford typical room rents in Kensington and Chelsea.

The rent affordability gap in each neighborhood

Source: Admiral analysis of SpareRoom data

Imran Khan, chief executive at technology provider ProperyLoop, believes the huge disparity in Westminster is mainly caused by “a mix of factors”.

“Summer brings an influx of both local and overseas students with varying budget constraints looking for accommodation for the new academic term,” he said.

“At the same time, the rental market is overheated, with rising prices forcing potential studio or one-bedroom tenants to opt for room rentals. This increased demand for cameras allows them to raise their prices, creating a ripple effect that pushes those with lower budgets out of the market altogether.”

Mass appeal

James Benson, managing director of local agents James of Westminster, said the neighborhood – which stretches from Pimlico to West Kilburn and includes the Houses of Parliament and Soho – attracts a wide range of people.

“It can be young and old, from anywhere and for any reason,” he said. “Summer is a busy season as people try to sort themselves out before the rush of entering new schools, jobs and colleges in September.”

High mortgage rates also mean people who might have been looking to buy in the area are instead on the market as renters, he added, contributing to a feverish environment.

“I recently pressed the button on a property and within 10 minutes I had an offer over the asking price.”

Overwhelming demand

The huge gap between budgets and rents in London has been driven by a widening gap between property supply and demand.

In Kensington and Chelsea, there were 67 people looking for accommodation for every SpareRoom listing in July.

This figure was 61 people per listing in Westminster and 54 per listing in Wandsworth.

Even in Croydon, where the gap was narrowest, there were three hunters per available room.

Noel Summerfield, head of home insurance at Admiral, said: “Since the Covid-19 restrictions were lifted last year, there has been an increase in renters looking for homes. The rental market is also affected by the increasing tendency of landlords to sell their properties.

“Nationally, just over half of renters in England, Scotland and Wales cannot afford the average price for a single-occupancy room, with Londoners hardest hit by the huge rent-to-budget gap.”

Ben Twomey, chief executive of campaign group Generation Rent, said: “London renters are being hit hardest by the cost of living crisis.

“With rent soaring across the city, ordinary renters looking for a new home really have no choice but to hand over record amounts of their hard-earned money to landlords or be forced to move away from friends, family and work.

“Rents for new tenancies will continue to rise until we get them under control. This must involve building new homes, especially social and affordable homes, so that people on average incomes can stay in their communities and continue to build their lives in our city.”