The improvement in affordability for renters is the result of earnings growth outpacing capital value and rental growth“Looking forward over our five-year forecast period, the trend of improving rent affordability is expected to continue, with a 16% increase in average earnings compared with a 9% increase in rents over five years. This means by 2024, private renters in England will use around 32% of their earnings on rent.”

“In London, the average monthly private rent for a one-bed property was £1,350. According to our analysis, this would require a salary of £41,000 per year, and around 940,000 private renters in the capital currently earn above this level.

“Housing costs are normally the biggest monthly outgoing, and our analysis looks solely at rents and income. Other costs, such as transport and energy bills, will also change over time and influence the cost of living, but to a lesser extent.

With 1.91 million private renters in London alone, demand for rentals remains strong, and there is a shortage of quality homes available to rent, meaning rents are likely to continue to rise. This analysis indicates that incomes are likely to outpace rental growth, which is positive for renters and landlords alike.

“The evolution of build-to-rent in the UK, offering professionally-managed new homes designed specifically for the rental market is helping to raise the bar on what’s available, particularly in major towns and cities where the bulk of operational build-to-rent can be found. We’re also starting to see diversification of price points and offer within the build-to-rent sector, for instance co-living is proving to be popular with graduates, and people seeking more sociable rental housing.