Stock image of London houses
(Picture: PA Archive)Londoners were warned on Thursday that they face a tighter cost of living squeeze than many other parts of Britain because of huge jumps in the price of housing, public transport and eating out.
It came as new data showed London rents rising at a record pace to a new all-time high in what is already one of the world’s most expensive cities.
According to property portal Rightmove average asking rents in London reached £2,193 a month in March, a 14.3 per cent rise from £1,919 last year.
It was the biggest annual jump of any region in the UK since its records began.
Rightmove’s director of property data Tim Bannister said: “In the first three months of this year, we’ve seen tenant demand exceed the high levels set last year, which when coupled with fewer available homes for rent, has resulted in the most competitive market we’ve ever recorded.”
A higher proportion of people rent from private landlords in London than any other region and will be exposed to ever increasing landlord demands.
More than one in three people are in private rented accommodation in inner London, falling to 26 per cent in outer London — but the national average is only 19 per cent.
Londoners also stand to be hit by the biggest rise in Tube and bus fares in decades next year, adding hugely to the cost of daily life in a city where only just over half of households own a car. The formula for the annual increase is currently set at the rate of the Retail Price Index (RPI) in July plus one per cent.
City forecaster Simon French, chief economist at brokers Panmure Gordon, said he feared the RPI could peak at 10 or 11 per cent in July, triggering a double digit increase in Transport for London fares of up to 12 per cent next January.
Barring intervention to cap the fares it would mean the cost of public transport rising in London by as much as 16 per cent in nine months.
A rise of 4.8 per cent — the highest in a decade — came into force in March, two months later than usual because of the wrangling over TfL’s finances.
It meant passengers paying an estimated £151 million more to travel this year.
The cost of taking an Uber — another key component of the London lifestyle — went up 10 per cent last November and rose again last month as a result of a ruling on how it charges VAT on rides. Restaurant bills are also rising sharply as hospitality businesses pass on a 7.5 per cent hike in the VAT rate this month, as well as the rising costs of energy and food.
Wednesday’s inflation figures from the Office for National Statistics (ONS) showed restaurant and hotel prices rising by two per cent in a month, the fastest increase on record.
Nick Bowes, chief executive of the Centre for London think-tank, said: “The cost of living pressures on Londoners are piling up by the week. Public transport fares are surging and, with interest rates nudging up and rents increasing, already sky-high housing costs are going up even further. To add to the burden facing Londoners, council tax is rising to bring in more funding for policing and transport.”
Businesses are also increasingly worried about the impact that falling disposable income will have on demand for their products and services.
Muniya Barua, managing director, policy and strategy, at business group London First, said: “With Londoners seeing their disposable income hit from many directions, the Chancellor must stand ready to take further action to ease the cost of living crisis. This will prevent more Londoners falling into poverty and ensure businesses can get back on their feet.”
