Paragon’s Rental Affordability Index takes recently published Government data, and by overlaying gross annual earnings with the average amount spent on rent, reveals an average rental affordability ratio for local authority areas across England.
On average, privately renting a property in Copeland, Cumbria, costs £5,236 per annum. Cross-referencing this with the salaries earned by residents in the area, averaging £49,812 annually, provides a rental affordability ratio of 10.5%.
This places Copeland at the top of the list of most affordable places to rent privately, followed by Ribble Valley in Lancashire with a ratio of 15.8% and Staffordshire Moorlands, where rents account for 15.9% of annual earnings on average.
The least affordable local authorities in which to rent a home were all found in London. In response to this, tenants in the capital often spread rental costs with others, resulting in London having the highest proportion of UK renters who share a property with people outside of their family.
In Kensington & Chelsea average annual incomes stood at £34,157 in 2021, while mean rents totalled £36,520 per year. This results in an affordability ratio of 106.9%, making the area England’s least affordable rental location by a considerable margin. Westminster was found to be second due to rent costing 81.1% of annual salaries on average while Hammersmith and Fulham made up the top three least affordable rental locations with an affordability ratio of 60.7%.
Across England, the average salary of £30,264 equated to 32.1% of the average rent.
Analysing the figures at a regional level highlights how the north of England is home to all of the most affordable regions. Yorkshire & The Humber boasts the lowest rent cost to income ratio of 23.2%, followed by the North West at 23.4% and the North East at 23.8%.
London (50.2%), the South East (36.1%) and East of England (33.3%) were the least affordable.
As expected, affordability correlates with property size, indicated by the number of bedrooms. Renting an average four-bed home in England costs 59.8% of salary, a three-bed 40.8.%, followed by properties with two bedrooms at 33.2%. One-bedroom homes equate to 26.4% of average salaries, studios 18.8% and a single room costs 17.4% of the average annual salary.
Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “Our rental affordability index shows considerable variation in how affordable privately rented homes are. A key influence on this is where properties are located with a general trend for more affordable housing being found in the north of England.
“The lower purchase prices for homes in regions such as Yorkshire and The Humber means that investors can keep rent prices relatively low while still covering their overheads. It’s important to acknowledge, however, that there is a limit to this, and the current economic conditions mean that it is becoming more expensive to manage a lettings business. Alongside the supply of properties that is exceeded by demand, this is placing pressure on rents.
“The Government and industry must work together to facilitate investment that will boost the number of homes available to rent, giving tenants more choice and helping to regulate rental costs.”
