Strong wage growth across the capital has begun to improve rental affordability in London despite tenants still spending around half of their income on housing, according to latest research.
Analysis by estate and lettings agent Benham and Reeves shows the average London renter now spends 49.5% of monthly earnings on rent, down on last year. Average monthly earnings across the capital stand at £4,586, compared with an average monthly rent of £2,268.
The burden remains unevenly spread. In Hackney, renters spend as much as 60.6% of income on housing, with average rents of £2,578 set against earnings of £4,253. Haringey follows at 58.7%, with Barking & Dagenham (56.8%), Ealing (54.6%) and Hounslow (53.3%) also among the least affordable boroughs.
Other areas where rent absorbs more than half of income include Brent, Newham and Southwark, while Enfield and Lambeth sit closer to the London average.
IMPROVED AFFORDABILITY
However, the research suggests affordability has improved since 2024. London-wide, rent as a proportion of income has fallen by 2.3 per cent, driven largely by pay growth rather than falling rents.
Some boroughs have seen sharper improvements. In Wandsworth, stronger salary growth has reduced the proportion of income spent on rent by 8.7%, while Camden recorded a 7.9% improvement, helped by lower rental values. Harrow, Hammersmith & Fulham and Tower Hamlets also saw notable declines.
The picture is not universally positive. Affordability has worsened in several boroughs, including Ealing, where rent now accounts for 3.4% more of income than last year, alongside increases in Haringey, Bexley, Richmond upon Thames and Enfield.
POSITIVE OUTLOOK
Marc von Grundherr (main picture, inset), Director of Benham and Reeves, says: “There’s no question that London remains an expensive city for renters and, for many people, the cost of housing still takes up a significant share of monthly income.
“However, what our research clearly shows is that the situation is starting to move in the right direction. Strong wage growth across the capital over the past year means that, despite high rents, affordability has actually improved in many parts of the city.
“While challenges remain and conditions vary by borough, rising earnings are helping to ease some of the pressure on renters and providing a more positive outlook than we saw this time last year.”
