Benham and Reeves: Cost of renting has risen significantly
The amount of net income required to cover the cost of renting in England has increased by 16.8% in the past two decades to 45.5%, lettings and sales agent Benham and Reeves has found.
This now accounts for 74.8% of the average salary in London having jumped 33.7% since the turn of the millennium.
Marc von Grundherr, director of Benham and Reeves, said: “There’s been plenty of positive changes to the rental market in the last 20 years with better codes of practice and improvements through technology allowing for a fairer, more transparent process for both landlords and tenants.
“Unfortunately, the one thing this can’t address is the huge demand for rental properties and the resulting increase in the cost of renting as a result and with wage growth failing to keep pace, the proportion of our earnings required to cover rent has spiked notably since the turn of the millennium.”
Some 20 years ago, the average rent accounted for 28.7% of the average income in England.
This was higher in London where 41.1% of income was required to cover rent, with the South East (31.2%) and South West (29.4%) also amongst some of the highest of all regions.
London has seen the biggest increase, with 74.8% of the average income now required to cover the average cost of renting.
This is a rise of 33.7% in the past 20 years.
The East of England has seen the second largest increase in that time, up 18.7%.
Meanwhile the South East has seen the third largest increase (18.6%) and is currently home to the second largest income-to-rent ratio at 49.8%.
In 2000, the East Midlands was home to the lowest income to rent ratio with 24% of earnings required for the average rent.
However today the North East is home to the most favourable ratio at 32% and has also seen the smallest increase in the past 20 years (7.4%).