Are we at peak rent?
Mar 29, 2022
Research by rental platform Rentd looked at the current average income of a tenant and how it compared to the average level of rental affordability.
The research shows that the average annual income for a rental tenant in England is currently £28,116 - that’s 12 per cent below the wider average.
As a rule of thumb, tenants should work to a rental affordability ratio of earning 2.5 times their rent in order to live comfortably. This is also a gauge that many letting agents will use when deciding if you are eligible to rent a property.
The average rent bill in England is £968 per month, or £11,616 per year.
This means a tenant needs to earn £29,041 per year for their home to be truly affordable. This is, however, £925 more than a tenant’s average annual income.
In London, the average tenant earns £39,585 a year but with annual rent costing an average of £21,084, this means they’re coming in -£13,125 below the affordability threshold.
In the South East, they’re falling £4,531 short; in the South West, it’s £4,046; in the North West it’s £2,985; and in the East, affordability is missed by £1,471.
ECONOMY 'STACKED AGAINST PRIVATE RENTERS'
Responding to last week's Spring Statement, Baroness Alicia Kennedy - director of Generation Rent: “We are in a dangerous moment with millions about to be plunged into fuel poverty and people already in poverty facing desperate choices between heating and eating.
“When inflation is running at 7.4 per cent, the Chancellor should have targeted help towards those least able to manage, by raising benefits at the same rate and making sure Local Housing Allowance covers rising rents.
"The higher National Insurance threshold will help many private renters but not our most vulnerable neighbours.
“Taking the National Insurance and income tax changes together, the Chancellor is stacking the economy against private renters who have to work for a living.”