MPs cannot afford to rent privately in London

Affordability of rent has always been a major issue for successive governments and without going into the long history over decades of governments of all parties the accepted ‘affordability’ figure for housing cost (rent or mortgage) is agreed at 33% of net income or take-home pay.

This Tory-led coalition has argued that social housing should be renamed taxpayer-funded housing, that social tenants are privileged, that those earning over £65k per annum (initially £100k per annum) should pay more to stay in social housing and the latest initiative is that the London Borough of Hammersmith & Fulham are banning any household income of over £40,200 from going on the social housing waiting list.

What all the above suggests is that the Tory message is simple; if you are working and earning you should, morally, leave social housing and move into private rented housing.

Setting aside the morality and criticism of how superficial that may be, I have looked at how affordable this is for a working tenant in London using the affordability benchmark of rent being no more than 33% of take-home or net pay.

Last month the VOA published the official latest quarterly private rent levels across England, a huge survey of nearly 500,000 rent levels in the private sector.  This gives us average private rent figures in all areas of England which are broken down into each LA area and further broken down into size, such as bedsit (studio), 1 bedroom, 2 bedroom and 3 bedroom private rent levels.  This is the largest and the most comprehensive study of private rent levels, is the official one, and also note that it slightly understates the private rent levels as it excludes services charges.

The table below reveal how much household gross salary is needed to afford a given size of privately rented property in each LA area using the average private rent figure given in the official VOA figures.  This acts as a ready-reckoner so if the household gross salary is £52k, double the average national salary of £26k, then it reveals you can only afford to privately rent a bedsit in Inner London.

AVERAGE PRIVATE RENT FIGURES – LONDON JUNE 2012

GROSS HOUSEHOLD SALARY TO AFFORD AT 33% OF NET INCOME

Area

BEDSIT

1 BED

2 BED

3 BED

Inner   London

£49,000

£67,000

£92,000

£129,000

Camden

£56,000

£81,000

£113,000

£169,000

City   of London

£65,000

£91,000

£127,000

N/A

Hackney

£45,000

£64,000

£83,000

£104,000

Hammersmith   & Fulham

£47,000

£65,000

£93,000

£135,000

Haringey

£39,000

£54,000

£70,000

£93,000

Islington

£47,000

£72,000

£98,000

£120,000

Kensington   and Chelsea

£65,000

£108,000

£168,000

£321,000

Lambeth

£36,000

£58,000

£77,000

£97,000

Lewisham

£32,000

£42,000

£54,000

£72,000

Newham

£32,000

£43,000

£52,000

£66,000

Southwark

£41,000

£59,000

£79,000

£93,000

Tower   Hamlets

£51,000

£65,000

£88,000

£101,000

Wandsworth

£43,000

£62,000

£80,000

£105,000

Westminster

£68,000

£96,000

£160,000

£274,000

Outer   London

£34,000

£43,000

£60,000

£75,000

Barking   and Dagenham

£27,000

£34,000

£42,000

£53,000

Barnet

£37,000

£49,000

£67,000

£94,000

Bexley

£24,000

£32,000

£41,000

£54,000

Brent

£38,000

£53,000

£72,000

£93,000

Bromley

£29,000

£37,000

£52,000

£63,000

Croydon

£28,000

£36,000

£47,000

£61,000

Ealing

£35,000

£51,000

£69,000

£85,000

Enfield

£33,000

£40,000

£55,000

£71,000

Greenwich

£33,000

£40,000

£58,000

£63,000

Harrow

£30,000

£42,000

£56,000

£73,000

Havering

£27,000

£33,000

£41,000

£53,000

Hillingdon

£29,000

£38,000

£52,000

£63,000

Hounslow

£32,000

£47,000

£63,000

£72,000

Kingston   upon Thames

£34,000

£45,000

£64,000

£81,000

Merton

£38,000

£51,000

£67,000

£88,000

Redbridge

£30,000

£37,000

£50,000

£65,000

Richmond   upon Thames

£40,000

£53,000

£77,000

£106,000

Sutton

£28,000

£35,000

£46,000

£64,000

Waltham   Forest

£32,000

£39,000

£51,000

£65,000

1. Household income at national average salary of £26k per year

  • Using the ready-reckoner above the only available privately rented option is a bedsit in Bexley which needs a gross salary of £24,000 to afford.

2. Household income at £40,200 per year – The Hammersmith & Fulham cut off figure

  • This could NOT afford a privately rented bedsit in Hammersmith & Fulham!
  • It could afford a bedsit in 3 inner London boroughs namely Haringey, Lambeth and Newham.
  • It could NOT afford a bedsit in the other 11 inner London boroughs
  • It could NOT afford to rent a 1 bed property anywhere in inner London

3. Household income for a couple with no children at £52k or double national average salary

  • This affords a 1 bed privately rented property in Lewisham and Newham in inner London but not in any of the other 12 boroughs.
  • It can afford a bedsit in Hammersmith & Fulham but not a 1 bed flat

4. Household income at a Member of Parliament salary (£65,783 pa)

  • A member of parliament can NOT afford to privately rent a 1 bed flat in inner London which needs a gross salary of £67k to afford.
  • If that MP wanted to privately rent a 1 bedroom property in Westminster he or she would need a salary increase of 46% to £96k pa.
  • A MP cannot afford to rent a bedsit in Westminster as that requires a gross salary of £68k!

5. A household income of £100k (circa 4 times average salary)

  •  This could afford to rent a 1 bed private property in Westminster and 2 bed property in Hammersmith & Fulham
  • It is not enough to rent anything more than a bedsit in Kensington & Chelsea however.

6. Household gross income of the PM (£142,500) – about 5.5 times national average

  • David Cameron’s salary could NOT afford to rent a 3 bed private property in Camden and only afford to rent a 1 bed private property in Westminster.

Summary

So many easy targets to take from the ready-reckoner which exposes the outrageous private rent levels charged there.

To be able to afford to rent privately in Hammersmith & Fulham and have the luxury of 2 bedrooms a couple need to have a gross income of £93k almost 4 times the national average salary. 

To afford the luxury of having children and needing a 3 bed property they need to earn £135,000 per year to rent privately – over 5 times the national average salary. 

Yet this doesn’t stop its council leader Andrew Johnson banning all those who earn over £40,200 from accessing social housing.

It still doesn’t stop housing minister Mark Prisk supporting this truly bizarre idea. Nice to see the new housing minister really knows his stuff – ah plus ca change!

One wonders how long it will be before it becomes totally unaffordable for businesses to operate in London.  That is the importance of affordable housing to the economy.  Take a couple on the “London Living Wage” of £8.30 per hour, 34% above the national minimum wage of £6.19 per hour and both earning that.  They have a gross income of £34,646 per year. They can just afford a privately rented bedsit in Outer London which on average requires a gross salary of £34,000.

To move to the LUXURY of a 1 bed privately rented property in Outer London a couple both need to work 40 hours per week at an hourly rate of £10.30.

To start a family and move to the REAL LUXURY of a 2 bed privately rented property in Outer London they need a combined salary of £60k per annum or both be working 40 hours per week at an hourly rate of £14.37.  If they want to do that in Hammersmith & Fulham they both need an average hourly rate of £21.38!

How dare you summise that the private rented market needs regulation!  Still how ironic that a MP cannot afford a bedsit in Westminster eh?  Wonder how soon it will be before businesses in the capital mention the huge link between operating there and private rent levels that do more than anything to prevent them doing that?

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One thought on “MPs cannot afford to rent privately in London

  1. Tom Oastrack October 4, 2012 at 8:36 am Reply

    I have often thought that a public investment in a decent apartment block or hotel style building in London, in which MPs can live when in London (if not already resident). You’d need about 600 rooms/suits. I have to stay in a hotel when in London doing my job… why don’t MPs.
    I would sort out accommodation expenses.

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