Our latest rental affordability report provides data from quarter two, covering the period April to June 2024. This adds to our inaugural Q1 rental affordability index and explores ongoing cost of renting for tenants in the private rental market.
The report focuses on the average rental share (per named tenant) versus individual average take-home income, leading to a rent to income ratio figure. This gives a clear picture of the percentage of net salary a tenant is spending on rent each month, and each year.
The index analyses data from over 60,000 individual renters on our database from across the UK.
To produce a more accurate snapshot of the reality most renters are faced with when it comes to salary spent on rent, this quarterly report only includes data from employed renters (excluding, unemployed, retired and students), which accounts for 46,000 Canopy customers.
Tenants are spending over a third of their salary on rent
Our latest index reveals that the average UK tenant is spending 35.7% of their monthly take-home pay on rent.
This was calculated by dividing the national average net income, which is £27,558 per year, by the national average monthly rent, which is £819 per tenant.
Our experts suggest that spending 30% of gross (pre-tax) income is considered the maximum for affordable rent, so our data shows that the majority of tenants are at the outer limit of what is considered financially feasible or ‘comfortable’.
The index findings also show an expected pattern between different regions across the UK, with tenants in the South of England spending more of their income on rent than those in the North of England.
Unsurprisingly, London has the most unaffordable rent to income ratio, as renters in the capital city are currently spending almost half their take-home salary on rent (44.27%).
Despite London renters having a much higher average net income (nearly £36,000 per year) than renters in other regions of the UK (£24,000 average), London is only location with an average rent of over £1,000 per tenant (£1,176) reinforcing existing perceptions that renting in the capital is particularly expensive.
The rent to income ratio for tenants in the South West of England isn’t far behind London though, at 44.07% on average.
Renters in the South East of England also spend over two-fifth of their income on rent (41.07%) on average.
The North East of England continues to be the most affordable region in the UK, spending a third (33.6%) of their net income on rent, which is around 2% less than the national average.
Major cities analysis
Our data from the first quarter of 2024 (January to March) found that the city you live in has a dramatic impact on rental affordability and this was no different in the data coverage between April and June.
Despite London’s notorious unaffordability in the private rental market, when it came to comparing cities, our data reveals that two South of England coastal cities take the top spots for unaffordability - above London - with tenants spending a very high proportion of their wage on rent.
Least affordable cities in the UK to rent (highest rent to income ratio):
- Bournemouth – 46.87%
- Brighton – 46.31%
- London – 44.27%
- Bristol – 41.03%
- Edinburgh – 40.55%
- Southampton – 40.54%
- Cardiff – 39.28%
- Birmingham – 38.73%
- Leicester – 38.06%
- Manchester – 37.37%
Bournemouth retains the top spot for the least affordable city for renters, with average monthly rents reaching £799 per tenant and renters typically devoting 46.87% of their take-home income (average £22,879 per year) towards rent. This is a staggering 11% higher than the national average.
Following closely behind, Brighton also remains among the most unaffordable cities for renters. Whilst rent in Brighton is typically higher than in Bournemouth (£867 per month), tenants here achieve a higher average take-home income of £24,949 per year, which works out as a high rent to income ratio of 46.31%.
Despite Scotland being one of the most affordable regions overall, with an average rent to income ratio of 37%, Edinburgh is named one of the least affordable cities in our latest report, taking fifth place with 40.55% of net salary going to rent.
The midlands cities of Birmingham and Leicester make the top 10 for UKs least affordable cities to rent in quarter two of 2024, with Manchester filling the last spot in position 10.
Consistent with our regional data, two cities in the North East of England are amongst the top three most affordable cities to rent.
Most affordable cities to rent in the UK (lowest rent to income ratio):
- Sunderland – 32.83%
- Belfast – 33.14%
- Newcastle – 33.73%
- Hull – 33.99%
- Derby – 35.23%
- Sheffield – 35.47%
- Leeds – 35.54%
- Glasgow – 35.54%
- Bradford – 35.56%
- Nottingham – 35.74%
Sunderland takes the top spot with tenants spending around a third (32.83%) of their salary on rent, whilst nearby neighbour, Newcastle, took third place with a rent to income ratio of 33.73%.
Belfast, the capital of Northern Ireland was the second most affordable city, with tenants spending a comfortable 33.14% of their take-home salary on rent.
Northern cities in England dominated the most affordable cities to rent in the UK list again (as expected), with Hull, Sheffield and Leeds all featuring, as did the Scottish city of Glasgow.
Top ten least affordable areas to rent in the UK
Our index has shown that rental prices fluctuate depending on the chosen city, but to provide a representative snapshot, our index data is split by postcode area so we can further breakdown the rental affordability insight and reveal the least and more affordable areas (cities, towns and London boroughs) over the last quarter in more detail.
Expectedly, London postcodes dominate the top ten least affordable areas (highest rent to income ratio) list, taking up the first seven spots in the top ten
- Enfield – 49.49%
- North London – 48.36%
- Harrow – 48.27%
- Romford – 47.43%
- Twickenham – 47.15%
- West London - 46.88%
- Bournemouth – 46.87%
- Croydon – 46.64%
- Brighton – 46.31%
- Oxford – 46.20%
Enfield takes the top spot overall, with the highest rent to income in the UK of 49.49%.
North London, Harrow, Romford, and Twickenham made up the top five.
Outside of London, Bournemouth is the seventh least affordable area to rent in, with Brighton coming in at ninth place and Oxford in tenth position, where tenants are spending 46.20% of their income on rent.
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How many renters are paying over half their salary on rent?
So far, our data has highlighted that some tenants are close to spending half their income on average in the least affordable areas. But just how many UK renters are in this situation?
The latest index shows that around a staggering one in five (19.26%) UK tenants are paying out half or more of their net income on rental payments each month.
In some areas of the nation, a shocking portion of tenants are struggling with affordable rent, as over one in ten tenants in London (11%) and Bournemouth (12%), are allocating 70% or more of their salary to pay rental bills.
Top ten most affordable areas to rent in the UK
The most affordable areas (lowest rent to income ratio) in the UK are located predominantly in the North East of England or Scotland:
- Halifax – 31.40%
- Paisley – 31.71%
- Darlington – 31.77%
- Dumfries – 32.77%
- Sunderland – 32.83%
- Belfast – 33.14%
- Shrewsbury – 33.56%
- Crewe – 33.72%
- Newcastle – 33.73%
- Carlisle – 33.80%
Halifax in West Yorkshire is the most affordable area for renters overall, with tenants spending just 31.4% of their take home salary on rent, with Paisley and Darlington other areas that have a lower rent to income ratio (of under32%).
Areas from within a variety of regions make up the rest of the top ten most affordable areas to rent list, including Shrewsbury (West Midlands), Crewe (North West) and Belfast (Northern Ireland).
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How many renters are spending just 20% of their salary on rent?
One in nine renters (11%) in the UK have a more comfortable rent to income ratio and spend only a fifth (20%) of their take-home salary on rental payments. In Darlington, County Durham this increases to almost three in ten tenants (28%).
Sunderland, Aberdeen and Dundee are also among the cities where tenants are most likely to have affordable (or at least more affordable) rent, as around one in five tenants (21%) pay just one fifth (20%) of their salary on rent.
Chris Hutchinson, CEO here at Canopy, commented: “Our latest report shows the stark reality for renters in 2024. A staggering one in five tenants nationally now dedicate half their income, and almost half of renters’ salaries in major cities like Bournemouth and Brighton are being eaten up solely by rent, it’s clear to see how difficult it is to achieve financial stability for a large pool of the renting population.
“Wages are struggling to keep up with rising rental costs and with a large proportion of income being allocated to just paying rent, tenants are feeling the financial strain with less disposable income for savings and other essential living costs, not to mention saving to buy a first home.
“Whilst it’s positive to see pockets of affordability remain, with a fortunate one in ten spending just 20% of their income on rent, these places could see a surge in demand as residents are priced out of their less affordable hometowns. Rising rental costs could quickly erode the affordability that currently exists in these areas.”
Read more on how to make the most of your finances
Rental affordability is an ever-growing challenge for many, and we’re here to help both tenants and landlords tackle this and other issues that can arise in the competitive and evolving UK rental property market.
Our RentPassport provides a digital footprint that can take the hassle out of the process for renters, making tenant referencing for letting agents and landlords.
Next time you move all you need to do is show letting agents and landlords your RentPassport which shows your previous rent history and puts their mind at ease to give you the green light without worrying about affordability.
Check out our resources page for more information and advice on all things rent.
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