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Spareroom research Evening Standard

ended 31. August 2023

A journalist at the Evening Standard is writing an article on some research from Spareoom showing that the average person posting on the site in July looking for a room to rent in Westminster had a budget £562 below the typical monthly asking price in the borough. That's £6k a year short of what they need, meaning they require a pay rise of circa £10k to afford a bed (after tax etc) to make it work. The journalist is after comment on why rents are so high in Westminster compared to other boroughs and why budgets are so low, in relative terms. More to the point, why are people looking for rooms to rent in a borough they clearly can't afford? Any thoughts, please send them across ASAP as the deadline is tight. Ensure your mobile is on your Newspage so the journalist can call you if need be.



 

10 responses from the Newspage community

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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
As a portfolio HMO landlord, we are prolific spareroom users. Rents in London tend to be higher due to the location and proximity to job opportunities, attractions and amenities. This demand naturally drives up prices. Additionally, limited housing supply in prime areas is pushing rents higher as demand has historically outstripped supply. People window-shop online despite budget constraints because they hope to find a bargain. Yet others prioritise location over cost. It's often a trade-off between proximity to work and budget. Many are unaware of the stark affordability gap until they start researching. Factors like housing policies, income inequality and job availability do play a role but the single biggest problem currently dogging the market is this government's apathy towards small and medium-sized landlords. The government and lenders have made it virtually impossible to be a landlord in London. Addressing the underlying supply issue is essential for a long-term solution.
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Imran Khan
Co-founder & CEO at QuantumLoopAI
The tension between renter budgets and asking prices in Westminster has been exacerbated by a mix of factors. Summer brings an influx of both local and overseas students, with varying budget constraints, seeking accommodation for the new academic term. This influx increases demand, particularly for room lets, and impacts average budget statistics. Simultaneously, the rental market is overheated, with soaring prices forcing would-be studio or one-bedroom renters into room-let options. This increased demand for room lets drives their prices upwards, creating a ripple effect that pushes those on lower budgets out of the market entirely. In this complex landscape, factors such as student demand, an overheated market, and shifts from studio or one-bedroom to room-let options converge to widen the gap between asking prices and what renters can realistically afford. Both the student market and the broader rental trends play pivotal roles in this widening chasm.
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Ashley Thomas
Director at Magni Finance
The clue to the room rent dilemma facing tenants in Westminster is in the name: Westminster. The PM lives there and you can hear the Corgies barking in Buckingham Palace, so it's no surprise. Westminster is very desirable and well-known as Prime Central London. It has the highest price per sq ft in London and the UK. The average property price is way over £1m and there have been sales above £100m. It is fair to say that the rental for these properties would be above the average monthly income.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The borough of Westminster holds prestige and lots of renters want that postcode. In reality, we all want things we can’t afford but still aspire to and that’s the reality of the London letting market. There has been a massive increase in prime rental income over the past 18 months and areas like this are now out of the reach of most.
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Justin Moy
Managing Director at EHF Mortgages
Given the widely reported shortage of university accommodation, this would make some sense, what with student budgets significantly less than the 'normal' market would dictate. Westminster is also one of the more expensive areas of London, with close proximity to Parliament and other prime central London locations. Combining both factors will naturally drive that £6k a year differential.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Westminster along with many other areas within a particular borough, seem to be rent or recession-proof, largely down to demographics. Westminister Consensus 2020 and 2021 showed a population of 205,087, where 36% of the population are non-UK passport holders. This equates to 73,831 residents that are non-UK passport holders. The top five non-UK countries of birth, that live in Westminster are USA, Italy, France, India and Spain. Now fast forward to today and I would imagine these numbers have increased and prove that foreign residency in sought-after areas like Westminster will also increase, regardless of the increases in room rents.
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Craig Fish
Director at Lodestone Mortgages
It is widely known that Westminster is one of the most highly-priced areas of London, not just for property prices but also rental. It's also an area that has a large proportion of rental properties. When you consider the struggles that landlords are having in achieving the desired rent to simply cover the increased mortgage payments they face, the news that tenants don't have the funds required comes as no surprise. Unfortunately, would-be tenants are going to have to start researching further out of London, where prices are a little lower, and suffer the increased travel costs. This is going to quickly become the 2023 version of Tim Burton's 'The nightmare before Christmas' for both landlords and the London property market.
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Aaron Strutt
Product and Communications Director at Trinity Financial
Many people want to live in the nicest parts of London where the property prices are high. They know they won't be able to afford to buy in places with multi-million pound properties like Westminster so they look online in the hope of renting a room. There is so much competition for affordable places to stay people are searching in the hope of finding somewhere central which is often close to their work.
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Joe Garner
Founder & Managing Director at Joe Garner Consulting
It is an utter paradox. Westminster has one of the largest number of rental properties of London boroughs but the highest rental cost per ft2. The demand for property in Westminster must be at such a high level that even at such a high quantity of available properties the prices have overheated. Westminster is popular for politicians and lawyers who perhaps prefer a short-term / serviced rental to a hotel.
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Joe Stallard
Director and Advisor at House and Holiday Home Mortgages
I think you'll find this goes for the rest of the country too. For example, local people in Devon have the same rental cost shortfall when trying to rent anywhere more than a cupboard. Even in the City of Westminster, it's worth remembering that, according to the local council, 23% of children live in families suffering income deprivation. If their parents work in the establishments nearby, presumably they have to live nearby or lose their jobs. Travel across London from cheaper boroughs can be expensive, time-consuming, and hazardous. Especially for those who work early or late shifts, and have limited funds. As always, the situation is complex and nuanced. Having an address in a nice area can be about something other than just wanting a decent postcode... both landlords and renters need support to make housing work.