Graduates in London have to spend 46% of take home pay on rent
Graduates moving to London for their first job after university face spending upwards of 46% of their take home pay on rental payments, Landbay’s Rental Index, powered by MIAC, has found.
Up to a third of all new graduates migrate to the capital to begin their first job within six months of finishing their degree.
The majority will be starting out in the capital renting a room or flat, leaving many trying to find an affordable place to live.
John Goodall, chief executive and founder of Landbay, said: “The graduate journey from university to the capital is a traditionally popular route for young people, offering a wealth of job opportunities and diverse experiences.
“However, many moving to London may now be struggling with the balance between location and affordability.
“Historically, desirable locations are likely to hold a rent burden that may make living costs insurmountable.
“Young professionals now need to weigh up a variety of factors, including commuting length, travel costs, and above all rent. This is especially true if they hope to save and invest, with the goal of achieving that first step onto the property ladder in the future.
“With the influx of students moving to the capital each year brokers can help their clients evaluate which areas and properties present the best opportunity that benefit from affordability, commuting distance and an attractive rental yield.”
Those hoping to live alone face spending 74% of a London graduate’s average post-tax income of £1,980.322 on £1,465 of rent – paying out £124 per year more than those moving to London the year before.
In a shared house of two people, overall rent of £1,944 adds up to 49% of each tenant’s income, while those co-habiting in a three-bed property would each spend 46% of their monthly take home pay on rent of £2,709.
Of the London Boroughs, the most affordable average residential rents of properties are found in Bexley (£1,022), Sutton (£1,071), Havering (£1,083), Croydon (£1,143) and Bromley (£1,191).
This is despite Bexley having seen the second strongest rental growth of all the boroughs with a 1.71% rise in average rents over the last year.
Rents in London have been increasing year-on-year in 28 out of the 33 London Boroughs, compared to the same time last year when rents were falling in 16 of the boroughs.
Out of the top 10 most affordable boroughs, Lewisham is the most viable option for renters wanting to be closer to the centre. Average rental prices of £1,254 make it the eighth most affordable London borough, also being just 15 minutes via train from the City of London.
On the other end of the spectrum, the most expensive average rents are found in the traditional prime property locations.
Kensington & Chelsea (£3,051), Westminster (£2,938), Camden (£2,253), City of London (£2,138) and Hammersmith & Fulham (£1,918) were found to be the most expensive boroughs to rent in with prices being well out of reach for those on a starting salary.