The latest rental market analysis from London lettings and estate agent, Benham and Reeves, has shown that while London remains the least affordable city for renters, the capital has seen the largest improvement in rental market affordability over the last five years.
Benham and Reeves analysed ONS data which measured rents against income, revealing how rental affordability levels have changed across each region of England between 2017 and 2022.
The latest figures (2022) show that across England, the average cost of renting currently sits at ÂŁ795 per month. With the average earnings coming in at ÂŁ3,050, this means the average renter is paying 26% of their monthly income on the cost of renting. The only silver lining when it comes to the current issue of rental market affordability is that this proportion has remained unchanged when compared to 2017.
Where has rental market affordability improved?
London remains the least affordable region of England for renters, where they are required to pay 35% of their income on rent. However, the capital has seen rental affordability improve when compared to 2017.
Across the capital the cost of renting has fallen, from ÂŁ1,495 in 2017 to ÂŁ1,450 in 2022, while typical incomes have increased from ÂŁ2,975 to ÂŁ4,155 per month over the same timespan.
As a result the current level of income required to cover the cost of renting has fallen from 50% in 2017 to the 35% required today.
It’s not just London that has seen a reduction in the level of income required to cover the average cost of renting.
In the East of England the proportion of income required to cover the average rent has reduced by -4%, as high incomes of ÂŁ3,560 stood against typical rents of ÂŁ865 per month.
Affordability also improved in Yorkshire and the Humber (-2%), the North West (-1%), South West (-1%), and East Midlands (-1%).
Worsening affordability
Tenant affordability has worsened in three regions, by 5% in the West Midlands, 4% in the South West, and 1% in the North West.
There’s likely been an influx of tenants moving to these regions in the past five years, shifting the balance of supply and demand.
It’s important to note that all these increases came from a low base.
Even after affordability became tougher for tenants, average incomes made up 29% of rents in the West Midlands, 29% in the South West and 26% in the North West – not far from the national average.
Director of Benham and Reeves, Marc von Grundherr, commented:
“Rental market affordability has long been a problem for the nation’s renters and while the percentage of income required to cover the cost of renting may have fallen across a number of regions, it certainly won’t feel like the challenge of renting has become any more affordable.
Yes, an increase in earnings may have helped to an extent, but there are many who simply won’t have benefited from this increase. At the same time, the cost of renting has climbed across every region but one, putting further pressure on tenant finances.
With the Government doing its best to deter landlords from the sector, a reduction in the level of available rental stock will have also helped to drive up the cost of renting and this is an issue that doesn’t look like it will be easing any time soon.”
Rent (median) price vs income (median) of private renting households by country and region – financial year ending 2013 to 2022 (ÂŁ per month)
Location
Rent – 2017
HH income – 2017
Affordability – 2017
Rent – 2022
HH income – 2022
Affordability – 2022
5 Year Change in Rent to Income Ratio
West Midlands
ÂŁ575
ÂŁ2,440
24%
ÂŁ695
ÂŁ2,420
29%
29%
South West
ÂŁ695
ÂŁ2,765
25%
ÂŁ795
ÂŁ2,755
29%
4%
North West
ÂŁ535
ÂŁ2,185
24%
ÂŁ615
ÂŁ2,410
26%
1%
East Midlands
ÂŁ550
ÂŁ2,185
25%
ÂŁ650
ÂŁ2,660
24%
-1%
South East
ÂŁ875
ÂŁ2,910
30%
ÂŁ950
ÂŁ3,255
29%
-1%
North East
ÂŁ495
ÂŁ2,000
25%
ÂŁ505
ÂŁ2,145
24%
-1%
Yorkshire and The Humber
ÂŁ520
ÂŁ2,065
25%
ÂŁ595
ÂŁ2,615
23%
-2%
East
ÂŁ750
ÂŁ2,675
28%
ÂŁ865
ÂŁ3,560
24%
-4%
London
ÂŁ1,495
ÂŁ2,975
50%
ÂŁ1,450
ÂŁ4,155
35%
-15%
England
ÂŁ675
ÂŁ2,575
26%
ÂŁ795
ÂŁ3,050
26%
0%
Rental affordabiltiy data sourced from the Office for National Statistics – Private rental affordability, England, Wales and Northern Ireland
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About the Author
Established in 1958, Benham and Reeves is one of London’s oldest, independently owned property lettings and sales agents. With specialism in residential sales, corporate lettings and property management in prime areas of London, the company operates from 21 prominently located branches and 14 international offices.