Tower Hamlets is one of a handful of London Boroughs to see an increase in rent over the course of the pandemic according to figures published by a London letting agency.
The east London borough, which has one of the highest poverty rates in the capital, saw a 1.2 per cent increase in the rent to income ratio during the first quarter of the Covid pandemic according to the Benham and Reeves report – setting it in stark contrast to neighbouring boroughs where many, including Lewisham, saw a decrease in rent affordability due to a change in both rent prices and a fluctuation in income for the average tenant.
A survey carried out by Tower Hamlets Council revealed that 53 per cent of residents have had a negative impact on their employment status, including reduced hours, being put on furlough or left without employment.
In 2020, the Tower Hamlet’s borough profile stated that 86 per cent of all jobs are filled by commuters into the borough. The profile says: “Median earnings for workers in Tower Hamlets are the second highest in the UK. Residents earn around £90 less on average.”
According to the Office of National Statistics, over the course of 2020, Tower Hamlets saw an increase of 6,000 new claimants receiving unemployment aid, making it the fifth highest borough in London.
Across all 32 London Boroughs the average tenant is now paying 60.2 per cent of their income to cover the cost of renting. Benham & Reeves analysed the rental data over the period of the pandemic, along with the latest earnings data from the Office of National Statistics, to discover this 4.2 per cent reduction in rent prices across London.
According to these statistics, Lewisham has seen a 7.1 per cent decrease in rent affordability due to a change in both rent prices and a fluctuation in income for the average tenant.
Director of Benham & Reeves, Marc von Grundherr, said: “This has come about due to two driving factors. The first being a drop in demand which has caused many landlords to slash rents in order to secure a tenant and recoup some form of rental income. The second has been the ongoing financial support of the furlough scheme which has made the difference between retaining employment and losing it for a great deal of people.”
Whilst Hackney and Croydon have seen a minor decrease, the average net salary for residents and average rent costs have remained stable and mostly unchanged.