Tenants of privately-let homes in London are typically having to spend almost 40% of their income on rent, making it unaffordable to all but the highest earners, official data suggests.
This compares to the rest of England where median-income private tenants can expect to pay around 23%.
Data published today by the Office for National Statistics show that tenants in the capital with a median income would have had to spend 38% of their earnings in order to afford an average-priced rental home in 2020.
In its research, which looked at the period from 2012-2020, the ONS deems that a property is affordable if a household would spend 30% or less of their income on rent.
It found that in London, only households in the highest income quartile would be able to afford a rental property without spending more than 30% of their earnings on rent.
Throughout the whole period the ONS reviewed, median-income households would have needed to spend more than 30% of their earnings on average rents in the capital.
London’s affordability was at its worst in 2017, when median-income households would have had to spend 50% of earnings on rent.
Looking at the national picture, there have been some changes year to year, but over the time period as a whole, private rental affordability has remained relatively stable, the ONS observes.
The East Midlands and North West are the most affordable rental regions for lower-income households and, in fact, the only regions in which rent prices meet the definition of affordability as determined by the ONS.
In 2020, median income households could expect to spend between 22% and 23% of their earnings on rent in the East Midlands, Yorkshire & Humber and North West.
For most regions, private rental prices have become slightly more affordable since 2013 as average incomes have risen further than rental prices.
The East of England saw the largest reduction in affordability, where the percentage of income needed to rent increased from 23% to 26% between 2013 and 2020.
Hargreaves Lansdown personal finance analyst Sarah Coles says: “In 2020, on average, we spent just under a quarter of our income on rent.
“However, the averages only tell a small part of the story.
“In reality, an awful lot of renters faced an uphill struggle, which has become even harder in the interim.
“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 richest 25% of people could describe rent as affordable.
“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.
“Similarly, higher rises at the top end of the wage spectrum can distort the average, which is why the statisticians also looked at whether people on the lowest 25% of incomes could afford the lowest 25% of rents.
“That’s when they found that the East Midlands and the North West are the only regions in England where people on the lowest incomes could afford the cheapest rents.
“And changes during the pandemic have made renting more difficult. “Outside London, rents in England rose 2% in the past 12 months.
“Overall, UK rental prices have increased by 10.9% since January 2015.
“In some areas things have become even more difficult since 2020, because rents are rising particularly fast.
“Separate ONS data showed that 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%.”
