The Spotlight on London Demand examines the challenges London will face with an ever growing population. Download here.

A convenient location is the most important factor when choosing a rental home, particularly for wealthier tenants. According to our YouGov survey, more than half of all respondents on incomes over £80,000 a year not only rate proximity to work or university as their biggest priority, but also said they were prepared to pay more for the convenience.

Size is also a factor, particularly for the better off. Almost half of all respondents on higher incomes said they would pay more for larger property compared with an average 35% of those surveyed. Private balconies, ensuite bathrooms, scenic views and gyms were also on the list of features for which those on higher incomes would pay more rent.

Reasons for renting

Private renting continues to be seen as a short term housing solution for most people. The main reason for renting across all income groups is an inability to raise a sufficient deposit given current mortgage lending conditions and high house prices. The increased availability of 95% LTV mortgages under Help to Buy will enable some of the more income rich households to afford the repayments on large mortgages. For less well-off renters, the current market will force them to continue renting.

There are some signs of lifestyle renters across all income groups and especially at higher levels but only as a short term solution.

Londoners commute for longer

Access to transport is essential to private renters, with 81% of respondents living within 10 mins of their nearest public transport. The affordability pressures of the London housing market are further reinforced by the travel time profile of London residents compared to the rest of the country. In London, 60% of respondents have a commute time of more than 30 minutes while outside of London only 30% of respondents have to travel more than 30 minutes to get to work.

Affordability

Despite the high (and increasing) rents, the affordability profile of London respondents is incredibly similar to the rest of the country. Our analysis suggests the average household in London spends 26.8% of their income on rent compared to 25.6% outside of London. With rents so high relative to underlying wages, the question of how this is the case arises.

Data from the 2011 Census offers some clues: the average household contains 2.6 people in London but only 2.3 people outside of London. A higher rate of households sharing (32% of respondents compared to 20% outside) allows high rents to be split among more individuals.

Reasons for moving

Rental values have grown significantly in London according to measures of new rents (up 24% since December 2009 according to LSL). However, separate data from the ONS measuring all rent show an increase of 6% over the same period. This suggests that many landlords have been happy to minimise void periods and benefit reap the longer term rewards of rising house prices rather than risk having their property empty and struggle to pay any mortgage.

Source: Savills Research/YouGov

Taken from
Spotlight: London Demand