Landlord or tenant - Capital costs keep creeping up

6 years, 10 months ago by Polly Rivers

London has been named as not only the most expensive city in the UK for landlords, but as one of the most expensive cities in the world for tenants.

Research from Kent Reliance has revealed that on average, landlords in the capital spend a stonking £6,535 a year before tax maintaining their property business, which is almost double the national average of £3,632.

This figure, which doesn’t consider mortgage costs or tax liabilities, works on the costs landlords face when budgeting for repairs, maintenance and void periods.

However, despite the figure being much higher than the average, it does remain proportionate to the rent, unlike the figures in Wales. Whilst landlords in the Valleys need to put aside an average of £2,211 to pay for the costs associated with providing a property for the private rental sector, lower rental rates means that this figure represents 41% of the average Welsh landlords’ annual property income. Across the UK, the average figure is £3,632 a year – equivalent to 34% of the rental income.

Costs aren’t just creeping up for landlords though. Research from RENTCafe and PricewaterhouseCoopers has confirmed what many tenants already know – London is officially one of the world’s priciest cities. The PWC identified the top thirty ‘Cities of Opportunity’, analyzing locations which offered the best opportunities with regards to infrastructure, intellectual capital, sustainability and ease of doing business.

London topped the PwC chart, coming in above heavy hitters such as New York, Hong Kong and Tokyo. However, when RENTCafe analysed the list with regards to how much money people earn in these cities and whether these salaries are high enough to afford a rental property, it was quite a different picture, with London sliding down into 22nd place!

The analysis revealed that the average tenant would need to spend 40% of their income on rent in the capital, compared to just 20% in the top-ranking city, Kuala Lumpar. Mexico City was the least tenant-friendly city, with tenants having to put aside 60% of their monthly earnings to pay for rent.

The table below shows the two rankings side by side, detailing the percentage of income that tenants have to put aside to pay their rent:

	PwC Cities of Opportunity		RENTCafe's Tenant friendly cities
1	London, Great Britain	1	Kuala Lumpar, Malaysia	20%
2	Singapore, Singapore	2	Moscow, Russia	21%
3	Toronto, Canada	3	Johannesburg, South Africa	27%
4	Paris, France	4	Bogata, Columbia	27%
5	Amsterdam, Netherlands	5	Rio de Janeiro, Brazil	27%
6	Manhattan (New York City), USA	6	Sao Paulo, Brazil	27%
7	Stockholm, Sweden	7	Beijing, China	27%
8	San Francisco, USA	8	Shanghai, China	28%
9	Hong Kong, Hong Kong	9	Sydney, Australia	29%
10	Sydney, Australia	10	Milan, Italy	29%
11	Seoul, South Korea	11	Toronto, Canada	29%
12	Berlin, Germany	12	Berlin, Germany	30%
13	Chicago, USA	13	Seoul, South Korea	30%
14	Los Angeles, USA	14	Tokyo, Japan	31%
15	Tokyo, Japan	15	Hong Kong, Hong Kong	32%
16	Madrid, Spain	16	Madrid, Spain	32%
17	Dubai, UAE	17	Stockholm, Sweden	34%
18	Milan, Italy	18	Amsterdam, Netherlands	35%
19	Beijing, China	19	Jakarta, India	37%
20	Kuala Lumpur, Malaysia	20	Chicago, USA	38%
21	Shanghai, China	21	Dubai, UAE	39%
22	Moscow, Russia	22	London, UK	40%
23	Mexico City, Mexico	23	San Francisco, USA	41%
24	Johannesburg, South Africa	24	Mumbai, India	41%
25	São Paulo, Brazil	25	Singapore, Singapore	44%
26	Bogotá, Colombia	26	Paris, France	46%
27	Rio de Janeiro, Brazil	27	Los Angeles, USA	47%
28	Jakarta, Indonesia	28	Lagos, Nigeria	57%
29	Mumbai, India	29	Manhatten, New York, USA	59%
30	Lagos, Nigeria	30	Mexico City, Mexico	60%

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