Will Living Wage Increases be Enough to Combat Rising Rents?

Living wage
Living wage

Will Living Wage Increases be Enough to Combat Rising Rents?

This week the Mayor of London Sadiq Khan announced that the London Living Wage has been increased from £10.20 to £10.55 per hour, with the UK Living Wage being raised to £9 per hour. The Living Wage Foundation has independently calculated the amount of this increase.

However, is this enough of an increase for London tenants to keep up with rising rents? According to trade union GMB, for many people both living and working in the capital, it will not be.

Warren Kenny, the GMB’s London regional secretary, said: “Last week GMB London showed that rents on two bedroom flats in London have risen by 21.7% since 2011 with the median rent standing at £1,450 a month.”

Therefore, despite this news of Living Wage increases, it still might not be enough. Information from GMB shows that 14 of the 33 London boroughs, the rent for a two-bedroom property has risen by over 30% also since 2011.

There has also been a 50% increase in rent prices, for the same property types, in Greenwich, averaging at £1,350 a month. This is the largest rise within London, however wages in the area have not managed to keep up.

The lowest average rent for a private two-bedroom flat, per month, is currently £1,025 in Bexley. A 28.9% increase has been recorded since 2011.

Warren Kenny has also commented: “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.

“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.”

 

The below table shows GMB’s figures for all 33 London boroughs:

Region 2018* Two-bedroom monthly median rent % change in rent 2011**-2018 % change in rent 2017***-2018
ENGLAND 650 18.2 0.0
rank
LONDON 1,450 21.7 -3.3
1 Kensington and Chelsea 2,708 8.7 -10.7
2 Westminster 2,492 9.5 0.0
3 City of London 2,297 13.5 -3.6
4 Camden 1,993 15 -3.2
5 Islington 1,907 17.4 -2.2
6 Hammersmith and Fulham 1,712 14.5 -7.1
7 Tower Hamlets 1,700 18.9 -5.6
8 Hackney 1,690 25.8 -6
9 Wandsworth 1,650 19 -2.9
10 Lambeth 1,582 28.1 -1.3
11 Southwark 1,560 20 -2.5
12 Richmond upon Thames 1,540 20.8 2.7
13 Brent 1,500 15.4 0.0
14 Haringey 1,450 19.5 -3.3
15 Ealing 1,447 31.5 -0.8
16 Merton 1,410 28.2 -2.8
17 Lewisham 1,400 47.4 3.7
18 Newham 1,400 47.4 0.0
19 Barnet 1,352 20 -3.4
20 Greenwich 1,350 50 0.0
21 Kingston upon Thames 1,350 26.5 0.0
22 Waltham Forest 1,300 42.9 2
23 Harrow 1,300 33.3 -1.9
24 Enfield 1,300 30 0.0
25 Hounslow 1,275 27.5 -5.6
26 Hillingdon 1,250 35.1 0.0
27 Barking and Dagenham 1,200 45.5 2.1
28 Croydon 1,200 41.2 2.1
29 Bromley 1,200 33.3 -2
30 Redbridge 1,200 33.3 -4
31 Sutton 1,175 38.2 -1.7
32 Havering 1,100 33.3 4.8
33 Bexley 1,025 28.9 0.0

** monthly rents recorded over the 12 months to the end of June 2011* monthly rents recorded between 1 April 2017 and 31 March 2018

*** monthly rents recorded between 1 April 2016 and 31 March 2017

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