Rents Just For The Rich? The Crisis Of Affordable Private Rented Housing In Southwark And Lambeth
Soaring rents are pushing all but the highest earners out of many parts of Southwark and Lambeth, according to new data. Average earners risk being pushed out as wealthy tenants snap up inner city rentals.
London’s Complex Housing Market
The intricacies of housing market dynamics in cities like London are worth exploring further.
To begin, cities like London attract a significant amount of attention because they are economic, cultural, and political hubs. London's unique appeal arises from its vibrant job market, prestigious universities, cultural richness, historical significance, and global influence. These factors attract a multitude of people from across the UK and beyond, thereby increasing the demand for housing.
High demand typically leads to higher prices, and the housing market in London is no exception. A noteworthy factor driving the high rents in London is the nature of its employment market. The city is a global hub for high-paying sectors such as finance, technology, and professional services. As such, it draws a high concentration of well-paid workers who can afford to pay premium rents, especially in desirable areas. This, in turn, contributes to the overall increase in rental prices across the city.
Competitive Rental Market in South London
With competition for rental properties high, those with the most money are getting their name on the dotted line, while the rest are forced to look elsewhere, Tom Mundy explained. Mundy is head of lettings technology provider Goodlord, which analysed information from more than 125,000 rental contracts.
High earners, who are able to keep up with soaring rents have been snapping up tenancies while those whose salaries are being outpaced by the price of rent are more likely to be looking for somewhere to live at the edge of the city or beyond.
The data shows that in Southwark and Lambeth’s SE postcode areas, the average rent has shot up by 22% over the last four years, from £1,780 in 2019 to £2,165 in 2023.
Meanwhile the average salaries of tenants in SE postcodes have also increased massively - up a whopping 36%, from £39,831 to £54,006 over the same period - according to Goodlord.
“We are seeing higher earners capitalise on tenancies in the central areas of London while those whose salaries are being outpaced by the price of rent are more likely to be renting in the outer London boroughs or moving to commuter towns,” Mr Mundy told The Standard.
All very well for those at the top, but what about the rest of us? The waiters, shop workers and cleaners who keep the capital running are being priced out of London. A poll of 1,000 tenants in the capital by housing provider Dolphin Living showed that inflation had already made housing costs unaffordable for 28 per cent.
Over half said they were struggling with a “significant impact” on their ability to pay rent in the January poll, and rents have been rising month on month in the capital since then.
“Undeniably the most unrelenting pressure in London comes from rent, something that can be practically addressed through the provision of affordable housing.” Dolphin Living’s chief exec told The Times.
A Dominant Private Rental Sector
Housing in London is largely dominated by the private rented sector. With social housing stocks dwindling and property prices soaring beyond the reach of many first-time buyers, more and more Londoners are left with no choice but to rent privately. This increased reliance on the private rented sector puts further upward pressure on rental prices.
The combination of high demand, limited supply, affluent job markets, and a large private rented sector all contribute to exceptionally high rental prices in London, making the situation more severe than in other parts of the country. As such, the crisis of affordable private rented housing is a pressing issue that needs targeted policy interventions.
What Can I Do To Improve The Private Rental Sector?
The crisis of affordable private rented housing in the UK, particularly in areas like Southwark and Lambeth, is the result of a perfect storm of high demand, limited supply, escalating property prices, and wage stagnation. Acknowledging the complexity of the problem is the first step towards solving it.
However, we can make a difference. While competition is driving up prices in the rental market it is more important than ever to hold landlords accountable for the condition of the houses they let. Marks Out Of Tenancy is working in Southwark and Lambeth, as well as across the rest of the UK to help tenants do just that by providing ratings and reviews of landlords and rented properties which help bring transparency to the market.