Renters Said Cheerio To London

Renters Said Cheerio To London

10 months ago2 mins

The streets of London have got emptier, with renters fleeing the uber-expensive city at a record pace.

What does this mean?

You know something’s wrong with the rental market when people start making houses out of dumpsters – but with the average London renter paying 9.1% more last month than in January 2022, that move almost seems sensible. That said, a more practical and popular option is simply upping sticks, with over 90,000 rental households leaving the city last year – the biggest exodus in over ten years. And it seems those ex-Londoners made the right call, with the average rent in the capital now at a wallet-thinning £2,141 ($2,588) a month – more than double the national average. That’s a steep asking price, especially when nearly 10% of private tenants are already falling behind on housing costs across the wider country.

Renters leaving London
Source: Proactive Investors

Why should I care?

Zooming in: Ghost town.

More than three quarters of the tenants who fled the capital kept their jobs, which means that it's a tale of two cities these days: you’ve got the real Londoners who still live in the city, plus the pseudo-urbanites who work London-based jobs from laptops further afield. Thing is, you can’t eat and drink over Google Meets – so with fewer people swilling and snacking after the office, the city’s economy is poised to take a hit. It's a similar story across the pond: it’s estimated Manhattan workers alone are spending $12.4 billion less each year now that they’re in the office less.

Manhattan spending
Source: Bloomberg

The bigger picture: Dominoes.

This trend isn’t about to fix itself. After all, when white-collar workers cut back on spending, it doesn't just mean there's less need for employees to offer them products and services: it also means that local tax revenues take a hit. And when that happens, there's less money to fund public services like sanitation and education – which could make the situation snowball.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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