Renters across Great Britain are spending a slightly smaller share of their income on housing but affordability pressures remain entrenched across much of the country.
New research from Dwelly shows tenants now spend 40.9% of their income on rent, down from 41.5% a year earlier. In England, the figure remains higher at 41.6%, albeit also down year-on-year.
The marginal improvement has been driven primarily by wage growth rather than falling rents. Earnings have increased by 5.4% over the past year, outpacing rental growth of 3.9%, easing the overall burden.
However, regional disparities remain pronounced. London recorded the largest improvement, with stronger earnings growth reducing the proportion of income spent on rent by more than two percentage points.
LEAST AFFORDABLE
Despite this, the capital remains the least affordable market, with renters still spending close to half their income on housing.
Elsewhere, Scotland, the South East, East of England and Wales also saw modest improvements, as wages rose faster than rents.
In contrast, affordability has worsened in several regions where rental growth has outstripped earnings. The North East and North West recorded the sharpest increases in the share of income required to rent, reflecting stronger rental inflation in traditionally more affordable areas.
STRONGER WAGE GROWTH
Sam Humphreys (main picture, inset), Head of M&A at Dwelly, says: “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.
“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.”
COST MANAGEMENT
He adds: “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.”
