The North East was England’s most affordable region to privately rent last year, Paragon Bank analysis has revealed.
In the North East of England, earnings averaged £30,078 in 2022. A rental affordability ratio of 23.5% is derived by dividing this by £7,054, the average annual cost to privately rent a home in the region.
This ratio highlights how over the past year, the affordability of privately rented homes in the North East has seen a small drop of 0.2%, after an increase in mean rents paid by tenants from £6,424 was broadly matched by a year-on-year rise in salaries.
This trend has been more evident in the North East when compared to its northerly neighbours and as a result, the region has climbed two places from third to first on Paragon’s Rental Affordability Index. This sees last year’s most affordable region to rent, Yorkshire & The Humber, fall to second place, while the North West now sits in third, down one place since 2021.
The same movement cannot be seen at the other end of the index, with London, the South East and East of England all retaining their 2021 positions as the first, second and third least affordable places to rent in England.
Average rents paid by tenants in London increased from £18,244 last year to £19,213. With earnings in the capital averaging £39,654 in 2022, London has an affordability ratio of 48.5%, down from 50.2% last year.
To determine the average rental affordability ratio for each region across England, Paragon’s Rental Affordability Index uses recently published Government data on the average amount spent on rent as well as gross annual earnings figures.
Nationally, rent amounts to 32.9% of the average salary of £33,270.
Richard Rowntree, Paragon Bank Managing Director of Mortgages, said “As we saw when we analysed these figures last year, we see stark disparity between how affordable privately rented homes are in different parts of England, the north notably more economical than London and the South West.”
“We also see how rent payments still represent a sizable proportion of monthly outgoings, the most significant in many cases. While we know that landlords often limit rent increases in order to keep good tenants and many understand the financial challenge their renters may currently face, they themselves are up against rising costs so a degree of rental inflation is unfortunately inevitable.”
“Fuelling this, demand for affordable private rented sector (PRS) homes has peaked over the past few years and remains well above supply. This is why it is vital that housing policy is developed in a way that promotes high standards while making investment in the PRS an attractive option for responsible lettings business owners.”