We have launched our first-ever Rental Affordability Index, providing a quarterly snapshot of the private rental market in showing how affordable tenants are finding their properties.
The index utilises tenant data including income and rental property price to provide a rent to income ratio figure; essentially what percentage of their salary a tenant is spending on their rental payments.
The Index will provide data on a national level, as well as city-specific data.
Our first Index covers the period of January to March 2024, with our next Index due to be released at the end of quarter two
Q1 2024: Tenants spending over a third of their salary on rent
Our inaugural Index found that the average tenant in the UK is spending 30.6% of their monthly wage on rental payments.
Many experts advise that 30% of earnings is considered the outer limit for affordability, so most Britons are either on the edge, or over the edge, of what is considered to be comfortable rental affordability.
In fact, we found that roughly one in five UK tenants (20%) is spending over half of their wage on essential rental payments.
Major city analysis
With over 50,000 data points, our tenant data covers every major city in the UK.
We found that between January and March 2024, there was a big difference in rental affordability depending on the city in which you live.
Tenants in Poole are struggling with rental affordability the most, with the average renter spending over 40% of their gross income on rent.
Stirling in Scotland is a surprise inclusion in the top ten, with a low average income meaning that tenants are spending an average of 37.8% of their wage on rental payments.
Belfast is the most affordable major city for renters in the UK, with the average tenant spending just over a quarter of their salary in rental payments (23.2%).
Table One: Areas of the UK where renters spend the highest percentage of their wage on rent
In some major cities like Brighton, tenants are spending well over a third of their wage on rent (38.4%).
Despite a reputation of being unaffordable, a high average income means that London (30.2%) has a more affordable ratio than the UK average.
Table Two: Analysis of UK’s major cities rent to income ratio (ranked highest to lowest)
Chris Hutchinson, CEO at Canopy, commented: “It is sobering to see that one in five tenants are spending the vast majority of their salary on rental payments, and it neatly encapsulates the tricky situation that many tenants with aspirations of home ownership are in.
According to our latest data, renters are spending 38% of their income on rent vs 18% for homeowners paying mortgages. That highlights the financial pressure on renters, meaning less money is able to be saved to achieve their goals.
Despite the price stability that further regulation would have on the market, there would likely be additional disincentives for landlords, leading to more leaving the market, and therefore reducing rental housing supply, or those remaining being less inclined to adequately maintain their properties. Where we could see positive change is towards longer tenancies for those who desire them, fostering greater security for families and communities.”
Read more on how to make the most of your finances
We understand that rental affordability is a tricky problem to navigate, and we’re here to help.
Check out our resources page for more information and advice that can help.
Likely to move in the near future? Our RentPassport provides a digital footprint that can take the hassle out of the process for you.
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