Rental affordability improves for tenants

While some tenants have struggled with employment issues owing to the pandemic, affordability for those still working has improved, ONS data indicates.

A private renter on an average income typically spends 23% of their income on rent, down from 26.3% in 2016.

This is due to average wages growing faster than rents, though another factor is people with low paying work losing their jobs.

Rental affordability is worst in London (37.7%), while it’s best for those in the East Midlands (22.3%).

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “There are massive regional differences, and despite rent cuts during the pandemic, renting in London is still eye-wateringly expensive. In the capital only the 25% richest people could describe rental as affordable (where rent makes up 30% or less of your income). It means that for all but the best off in the capital, rents are ruinous.

“Elsewhere in the country, you need to be careful about averages. During the pandemic, a rise in the average wage was the result of more people on lower incomes losing work, so a rising average wage wasn’t a sign that everyone was getting richer: in fact it was the result of those on low wages losing work and becoming poorer.”

The ONS said only the East Midlands and the North West are affordable for the lowest 25% of incomes.

Changes during the pandemic have made renting more difficult in some of the cheaper areas.

In Northern Ireland, rents are rising 4.3% a year, while in the East Midlands rents are up 2.7% and in the South West they’re up 2.6%.

Coles added: “Life could get even harder in the immediate future, because many landlords are cashing in on house price rises and selling up, while others are switching to holiday lettings.

“According to RICS, the number of rental properties coming to the market has dropped relentlessly over the past 12 months.

“This is pushing rents up, and agents expect them to go even higher: RICS is predicting annual rises of 2.5%. It means if you want to live in an area of high demand and low supply, you could easily end up paying far more than 23% of your income to get the property you want.”

Leave a Reply