There is a massive shortage of homes for rent at reasonable rents for workers in the lower pay grades, says GMB London

A new study by GMB of official data shows that between 2011 and 2018 rent prices for 2 bedroom flats in London increased by 21.7% to an average of £1,450 per month, whilst over the same period, monthly earnings increased by just 9.1%.

In London, Greenwich is the borough that has seen the biggest rise in rent. Between 2011 and 2018 rent of a 2 bedroom flat increased by 50%, to an average rent of £1,350 per month. Meanwhile, wages in the borough increased by just 7.2%.

Other London boroughs with a significant gap between pay-rises and rent are;  Lewisham, where rent increased by 47.4%, yet wages have increased by just 16.8%; Newham, where rent increased by 47.4%, yet wages have increased by just 9.5%; Barking and Dagenham, where rent has increased by 45.5%, yet wages by just 16.4%; Waltham Forest, where rent has increased by 42.9% since 2011, and wages have increased by 16.1%; and Croydon, where rent for a two-bedroom flat has increased by 41.2% to an average of £1,200 per month, whilst wages have increased by just 11.7%.

The figures for the 33 London boroughs are set out in the table below. This is from a new study by GMB London Region of official data from the Office of National Statistics (ONS) for 33 boroughs in London. It shows the median rent of a 2-bedroom flat in 2018, the percentage change in rent-prices between 2011 and 2018, and the percentage change in monthly earnings between the 2011 and 2018.

Rank

Boroughs

Two bedroom median rent 2018

% change in rent 2011-2018

% change in monthly earnings 2011-2018

LONDON

1450

21.7

9.1

1

Greenwich

1350

50.0

7.2

2

Lewisham

1400

47.4

16.8

3

Newham

1400

47.4

9.5

4

Barking and Dagenham

1200

45.5

16.4

5

Waltham Forest

1300

42.9

16.1

6

Croydon

1200

41.2

11.7

7

Sutton

1175

38.2

10.3

8

Hillingdon

1250

35.1

3.2

9

Harrow

1300

33.3

10.4

10

Bromley

1200

33.3

18.7

11

Redbridge

1200

33.3

3.3

12

Havering

1100

33.3

9.2

13

Ealing

1447

31.5

8.6

14

Enfield

1300

30.0

6.5

15

Bexley

1025

28.9

4.1

16

Merton

1410

28.2

7.8

17

Lambeth

1582

28.1

0.8

18

Hounslow

1275

27.5

8.6

19

Kingston upon Thames

1350

26.5

8.5

20

Hackney

1690

25.8

7.7

21

Richmond upon Thames

1540

20.8

-0.8

22

Southwark

1560

20.0

5.0

23

Barnet

1352

20.0

15.2

24

Haringey

1450

19.5

9.0

25

Wandsworth

1650

19.0

9.6

26

Tower Hamlets

1700

18.9

11.2

27

Islington

1907

17.4

4.8

28

Brent

1500

15.4

13.1

29

Camden

1993

15.0

14.3

30

Hammersmith and Fulham

1712

14.5

14.3

31

City of London

2297

13.5

n/a

32

Westminster

2492

9.5

3.3

33

Kensington and Chelsea

2708

8.7

n/a

Warren Kenny, GMB Regional Secretary said:

“These official figures show increases in average rents for two bedroom flats of 30% or higher in 14 of the 33 London boroughs in the seven years since 2011. The average increase for all the boroughs is 21.7%. By comparison average earnings in the same period rose by 9.1% in London.

“In Greenwich rents went up by no less than 50% so that a two bedroom flat now absorbs about 70% of the average net pay of a resident in the borough.

“Policy mistakes have made the housing position for lower paid workers worse. Council homes for rents at reasonable levels were aimed at housing the families of workers in the lower pay grades and did it successfully for generations.

“These were sold off –  but crucially not replaced as a matter of Tory dogma. Housing benefits was introduced instead to help pay rents for those on lower paid and the costs to the taxpayer has ballooned to over £24 billion a year. It would have been far cheaper to build the council homes.

“The chickens are now coming home to roost on these policy mistakes. There is a massive shortage of homes for rent at reasonable rents for workers in the lower pay grades. There is now no alternative to higher pay to pay these higher rents plus a step change upwards in building homes for rent at reasonable rents.

“Regeneration companies like Be First in Barking and Dagenham, need to take look at these statistics and see that they need to be offering more affordable housing. Rents in Barking and Dagenham are up 45.5% since 2011, compared to a 16% rise in wages. Earlier this year GMB also found that 30% of Barking and Dagenham residents in employment were earning less than a living wage. These companies have to start offering at least 50% of all new builds as social housing.

“Dogmatic opposition to allowing councils to build homes for rent is a luxury we can’t afford. So too are plans by property developers and councils to demolish over 100 council estates in London and replace them with luxury housing.

“These high rents are here to stay. So too are younger workers living for longer in private sector rental accommodation. As a direct consequence, employers must be prepared to pay much higher wages to staff to enable them to afford these much higher rents.

“If employers don’t respond with higher pay they will face staff shortages as workers, especially younger people, are priced out of housing market.

“It makes little sense for these workers to spend a full week at work only to pay most of their earnings in rents.  They will vote with their feet.”

Housing Management & Maintenance (HMM). 2019. GMB Union.
Available at: https://www.housingmmonline.co.uk/companies/gmb/