Which places in England have the most affordable rental rates?

Posted on Tuesday, May 17, 2022

Data analysis also reveals least affordable areas for renting a home

Copeland, Ribble Valley, and Staffordshire Moorlands were the most affordable places in which to privately rent in England last year, data analysis from Paragon Bank has revealed.

The bank’s Rental Affordability Index found Copeland in Cumbria as England’s most affordable place to rent a home, with rent payments costing £5,236 a year.

Cross-referencing this with the salaries earned by residents in the area, averaging £49,812 annually, provides a rental affordability ratio of 10.5%.

Copeland was followed by Ribble Valley in Lancashire with a ratio of 15.8%, and Staffordshire Moorlands, where rents accounted for 15.9% of annual earnings on average.

The least affordable local authorities in terms of renting a home were all found in London. As a result, Paragon said, tenants in the capital often spread rental costs with others, noting that London has the highest proportion of UK renters who share a property with people outside of their family.

In Kensington and Chelsea, average annual incomes stood at £34,157 in 2021, while mean rents totalled £36,520 per year. This resulted in an affordability ratio of 106.9%, making the area England’s least affordable rental location by a considerable margin.

Westminster was second due to rent costing 81.1% of annual salaries on average, while Hammersmith and Fulham made 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 and 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 the 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, managing director of mortgages at Paragon Bank, said that lower purchase prices for homes in some regions mean that investors can keep rent prices relatively low while still covering their overheads. However, he pointed out that there is a limit to this.

“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.”   

Paragon’s Rental Affordability Index takes recently published government data, and by overlaying gross annual earnings with the average amount spent on rent, has revealed an average rental affordability ratio for local authority areas across England.

Rental data was pulled from ONS Private Rental Market Statistics for the year to September 30, 2021, while income data was based on ONS House Price to Residence-based earnings Ratio for the same period.

Via @MortgageIntroducer