Spiraling London Room Rents Exacerbate Cost of Living Squeeze - BLOOMBERG
The cost of renting a room in London is surging, the latest blow to the city’s poorest residents.
It costs 15% more to rent a room in the capital than it did last year, according to data compiled by SpareRoom, a website that matches people seeking roommates. And the burden is not being evenly distributed across postcodes.
Prices have risen almost 20% from pre-pandemic levels in suburban districts like Lower Edmonton and in areas in and around Eltham. By comparison, they’re up just 1% in the same period in the affluent postcode that includes Belgravia in central London.
UK home prices are more unaffordable than ever for potential buyers, contributing to soaring rents in the capital. Energy costs have also sent inflation to a 40-year high, crimping the amount people can pay and leaving many able to afford only a room.
“Whenever we go through some sort of financial squeeze, like we did just over a decade ago, a lot of people end up in the room rental markets, partly because it’s the most affordable way to live,” Rupert Hunt, Chief Executive Officer at SpareRoom, said by email.
While the capital has areas of great wealth, it is also home to some of the most deprived parts of the UK, meaning people are more vulnerable to the rising costs of everything from food to fuel.
A quarter of Londoners wouldn’t be able to afford an unexpected expense of £500, according to a poll by Centre for London and Savanta ComRes in the spring. That’s four percentage points higher than nine months earlier.
One attraction of renting a room is that landlords are more likely to include bills in the price, said Jeremy Leaf, a real estate broker who leases properties in north London. That fixed cost is an attraction with energy prices spiraling.
There’s also more demand in the suburbs because renters are seeking more space so they can have a desk in their room, said Aneisha Beveridge, head of research at broker Hamptons International. That gives them the option of working from home a few days a week, she said.
Tommy Power, a 35-year-old working for fintech Monzo Bank Ltd., said competition for rooms means he is getting fewer and fewer responses when he asks to see a place.
Renting a room is more attractive than leasing an apartment because it’s significantly cheaper and offers more flexibility around moving out, he said.
People are being pushed “into renting, into sofa surfing, into going back to their parents,” said Paul Cheshire, emeritus professor of economic geography at the London School of Economics. That means they’re moving to cheap parts of London and “pushing up demand there relative to supply.”