• The North East tops the list of England’s most affordable region to rent, followed by Yorkshire and the Humber and the North West
• London, the South East and the East of England retain places as least affordable rental locations
• Across the whole of England, an average annual income of £33,270 results in an affordability ratio of 32.9%

The North East was England’s most affordable region to privately rent last year, Paragon Bank analysis has revealed.

In the North East of England, earnings averaged £30,078 in 2022. A rental affordability ratio of 23.5% is derived by dividing this by £7,054, the average annual cost to privately rent a home in the region.  

This ratio highlights how over the past year, the affordability of privately rented homes in the North East has seen a small drop of 0.2%, after an increase in mean rents paid by tenants from £6,424 was broadly matched by a year-on-year rise in salaries.

This trend has been more evident in the North East when compared to its northerly neighbours and as a result, the region has climbed two places from third to first on Paragon’s Rental Affordability Index. This sees last year’s most affordable region to rent, Yorkshire & The Humber, fall to second place, while the North West now sits in third, down one place since 2021.

The same movement cannot be seen at the other end of the index, with London, the South East and East of England all retaining their 2021 positions as the first, second and third least affordable places to rent in England.

Average rents paid by tenants in London increased from £18,244 last year to £19,213. With earnings in the capital averaging £39,654 in 2022, London has an affordability ratio of 48.5%, down from 50.2% last year. 

To determine the average rental affordability ratio for each region across England, Paragon’s Rental Affordability Index uses recently published Government data on the average amount spent on rent as well as gross annual earnings figures.

Nationally, rent amounts to 32.9% of the average salary of £33,270.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “As we saw when we analysed these figures last year, we see stark disparity between how affordable privately rented homes are in different parts of England, the north notably more economical than London and the South West.

“We also see how rent payments still represent a sizable proportion of monthly outgoings, the most significant in many cases. While we know that landlords often limit rent increases in order to keep good tenants and many understand the financial challenge their renters may currently face, they themselves are up against rising costs so a degree of rental inflation is unfortunately inevitable.

“Fuelling this, demand for affordable private rented sector (PRS) homes has peaked over the past few years and remains well above supply. This is why it is vital that housing policy is developed in a way that promotes high standards while making investment in the PRS an attractive option for responsible lettings business owners.”

Media contact:

Jordan Lott
Media Relations Manager
[email protected]
+44 (0)121 712 1054

Notes to editors:

Rental data based on ONS Private Rental Market Statistics for the year to September 2022
Income data based on ONS House Price to Residence-based earnings Ratio for the year to September 2022

Paragon lends to private individuals and limited companies and has mortgages suitable for single, self-contained properties, as well as HMOs and multi-unit blocks. Paragon can accommodate higher aggregate lending limits and more complex letting arrangements including local authority leases and corporate leases along with standard ASTs.

Paragon introduced its first product aimed at the professional property investor in 1995 and is a member of UK Finance, the Intermediary Mortgage Lenders Association (IMLA), National Landlords Association (NLA) and the Association of Residential Letting Agents (ARLA). 

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £14 billion of assets under management, helping more than 340,000 customers to achieve their ambitions.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ.