Renters across Great Britain are spending a smaller share of their income on rent than a year ago, but affordability pressures remain acute across much of the country, according to new research from property technology company Dwelly.
The data shows renters now spend 40.9% of their income on rent, down from 41.5% the previous year. Across England, the figure sits slightly higher at 41.6%, easing from 42.2%. The improvement, however, has been driven by wage growth rather than any slowdown in rental costs. Rents across Great Britain rose 3.9% over the past year, while earnings grew at a faster 5.4%.
London leads improvement but remains least affordable
At a regional level, the picture is uneven. London recorded the sharpest reduction in the proportion of income needed to cover rent, falling by 2.33 percentage points, as earnings grew 6.9% against rental growth of just 2.1%.
Despite that improvement, the capital remains by far the least affordable region, with renters still spending 49.5% of their income on rent.
Scotland, the South East, the East of England and Wales also saw affordability improve year on year, each recording falls in the share of income required to rent as wage growth outpaced rental increases.
Northern regions see affordability worsen
In contrast, rental growth has outpaced or matched wage growth across several regions, pushing affordability in the wrong direction. The North East recorded the steepest deterioration, with rents rising 7.9% against earnings growth of just 4.4%, resulting in a 0.87 percentage point increase in the income share required to cover rent.
The North West followed a similar pattern, with rental growth of 6.1% outstripping earnings growth of 4.2%, pushing the figure up by 0.55 percentage points.
More modest increases were recorded across the South West, Yorkshire and the Humber, the West Midlands and the East Midlands, where rental and wage growth remained more closely aligned.
Despite worsening trends, some of these regions remain among the most affordable in the country. The North East records the lowest proportion of income spent on rent at 26.9%, followed by Wales at 28.5% and Yorkshire and the Humber at 28.6%.
What the data means for landlords and renters
"On the face of it, a reduction in the proportion of income required to cover rent is positive, but it's important to understand what's driving it," said Sam Humphreys, head of M&A at Dwelly. "In many cases, this improvement is down to stronger wage growth rather than any meaningful reduction in rental costs, and it's also being seen in areas that remain some of the least affordable when you look at the overall share of income required."
"At the same time, the more affordable regions are now seeing the strongest increases in the proportion of income needed to rent, which shows that affordability pressures are still building across much of the country."
"So while there are some encouraging signs, the reality is that more needs to be done to improve affordability, particularly as further legislative changes through the Renters' Rights Act begin to take effect and increase the cost and resource required to manage rental properties."
"This is where technology is starting to play a more important role. By streamlining processes and reducing the administrative burden on agents, it allows them to operate more efficiently, which in turn helps landlords manage costs and maintain more sustainable rental pricing in what remains a challenging environment."
