Harder than ever for local private renters in Tower Hamlets to afford rent and deposit
Tower Hamlets tenants face being priced out of the area, as some report paying up to 88% of their monthly income on rent.
Tower Hamlets private renters are spending 64% of their monthly income on rent, with some renters in Aldgate, Whitechapel and Mile End losing up to 88% of their monthly takings, according to new research from Zero Deposit.
The research published on Tuesday 12 September examines the proportion of monthly income that is spent by private renters in the UK on tenancy deposits and rent.
The average UK renter is spending 56% of their income every month to cover the cost of their rent. In the first month of renting, UK tenants must also pay a deposit which is set at the value of up to five weeks rent, according to Zero Deposit. Zero Deposit’s survey found that once the cost of the tenancy deposit was taken into account, the average UK renter will pay the equivalent of 120% of their monthly income in their first month as a tenant.
Zero Deposit has also released the professions that are most hit by high rates of rent. Cleaners, hairdressers, and chefs are most impacted by the rental market. The average monthly income of UK hairdressers is £1,103. According to Zero Deposit’s survey findings, a rental deposit would equate to 130% of their monthly income, whilst monthly rent would require 113%.
Due to the gender pay gap in the UK, the situation is graver for women than for men. The average monthly income for a UK male is currently £2,590, while the average UK woman earns £1,858 per month.
According to Zero Deposit’s survey, the average UK man must pay 48% of his monthly income to cover rent, which is a 2% increase from last year. Meanwhile, in a 3% increase from a year ago, the average UK woman spends 67% of her monthly earnings on rent.
Compared to the rest of the UK, the proportion of income spent on rent is even greater in the London borough of Tower Hamlets, where the average net salary is £2,982.
As a proportion of the average income in Tower Hamlets, private renters in the Bow District are spending 73% of their monthly income on rent, while tenants in the Poplar District pay 80%. Zero Deposit found that for some private renters of Wapping, Stepney, Shadwell, and Whitechapel, 88% of their monthly income is spent on rent.
This research from Zero Deposit arrives at a time when rates of rent have been rapidly increasing, especially in London. The Big Issue stated:
‘Rents are now at their most unaffordable point for a decade.
‘In the year up to July 2023, the ONS reported London’s annual private rental price growing by 5.5%, compared to 5.2% in the rest of the country’.
Zero Deposit is a UK-based deposit-free renting platform with its headquarters in Hertfordshire. Zero Deposit is a deposit replacement scheme that works with 79% of the top UK estate agents.
Sam Reynolds, CEO of Zero Deposit, commented:
‘Households across the nation have been struggling with the extremely high cost of living for quite some time now and while much has been made of the plight of homeowners facing higher mortgage rates, we felt it was also important to highlight the extremely tough task facing the nation’s renters’.
The UK has been experiencing high inflation rates since 2021, causing the Bank of England to raise interest rates 14 times since December 2021.
The rise in interest rates to 5.25% has increased monthly mortgage payments and consequently rental prices in the UK.
Furthermore, there is a limited supply of rental property in UK cities, especially in London, compared to the number of people who want to live there.
Unaffordable rates of rent may be harmful to the national economy. Key workers such as junior doctors and teachers are unable to afford rent, reducing the amount of public sector workers in London.
The more tenants pay per month on rent, the less they may save, preventing renters from buying property in the future. Those who can’t afford to live near their place of work will spend their time commuting, which has been linked to a lower quality of life.
Renters become forced into overcrowded, poor-quality housing, which causes severe health risks. The consequences of poor-quality housing can be fatal. In 2020, two-year-old Awaab Ishak died due to his exposure to fatal mould in his home in Rochdale, Manchester.
Lucy Thomas, 26, who has been renting in Whitechapel for four years, stated:
‘It’s mad at the moment. I’m very fortunate to have a great landlord who keeps my rent reasonable but if I needed to move, the same size flat would be at least £300 more than what I currently pay’.
Another Tower Hamlets resident, 25, who has been renting with their partner, 26, in Bow Quarter for two years, commented:
‘We are currently in the process of moving as our landlord is putting up our rent by £300 per month which we can no longer afford’.
Reynolds, CEO of Zero Deposit, commented:
‘Not only is there a real lack of suitable rental properties available, but those who wish to secure one face the enormous financial hurdle of an upfront rental deposit in order to do so – often at five weeks asking rent.
‘Across some parts of Tower Hamlets, this cost equates to well over a month’s net income which many people simply can’t afford’.
He stated:
‘Some may even find themselves effectively homeless’.
In a poll on Instagram, 57% of our followers reported spending 40-60% of their monthly income on rent.
In February this year, Tower Hamlets council announced a ‘freeze’ on council tax, meaning that residents only faced a 2% rise in bills to cover the borough’s adult social care precept. Meanwhile, the majority of London faced a 5% hike in bills.
For advice on renting, visit londonrentersunion.org/.
If you found this article helpful, why not read Tower Hamlets Council launches University Bursary Award to support students amid the cost-of-living crisis.
A freeze on council tax is a start. A freeze on incomers would work better. More people than places to live equals higher prices and ends up counter-productive. As in killing the goose that lays the golden eggs.