Living in London has its price, and it is a high one. The average monthly rental costs could range from approximately 1,100 British pounds for a dwelling in Croydon, to over two thousand British pounds for areas in the heart of the city – Westminster, Lambeth, Chelsea, Fulham, Hammersmith and Kensington. According to the Index of Private Housing Rental Prices (IPHRP), rents have risen by 8.5 percent since 2015. Should one opt for purchasing a home in London, the average monthly costs would be close to 1,400 British pounds. Potential buyers save approximately 400 British pounds monthly from the cost difference of buying over renting, but should also be ready to set aside an average of over 130,000 British pounds for a deposit.
Not surprisingly, private renters constitute the largest share of households in London. This, however, might change, if the number of people who buy a dwelling with a mortgage keeps growing. Yet, properties available for rent heavily outweigh those available for sale.
While housing in London seems expensive, this can be partially explained by high development costs, resulting from political uncertainty, climbing construction costs, and the weakening of the British pound. As of the third quarter of 2020, the Prime Central Residential Development Land Index (RDLI) reached 117.85 points, an increase of 17.85 percent since September 2011, but also a considerable drop since 2014 when the index peaked.