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 £795 per month. With the average earnings coming in at £3,050, 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 £1,495 in 2017 to £1,450 in 2022, while typical incomes have increased from £2,975 to £4,155 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 £3,560 stood against typical rents of £865 per month.
Affordability also improved in Yorkshire and the Humber (-2%), the North West (-1%), South West (-1%), and East Midlands (-1%).
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, said, “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.”