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Paragon’s Rental Affordability Index reveals England’s most affordable rental locations 

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  • Paragon’s Rental Affordability Index highlights Copeland as England’s most affordable place to rent a home, with rent payments accounting for 10.5% of annual salary
  • Yorkshire & The Humber is most affordable region to rent overall, followed by the North West and the North East
  • Average rental affordability ratio for the whole of England is 32.1% from an annual income of £30,264

Copeland, Ribble Valley and Staffordshire Moorlands were the most affordable places to privately rent in England last year, Paragon Bank analysis has revealed.

Paragon’s Rental Affordability Index takes recently published Government data, and by overlaying gross annual earnings with the average amount spent on rent, reveals an average rental affordability ratio for local authority areas across England.

On average, privately renting a property in Copeland, Cumbria, costs £5,236 per annum. Cross referencing this with the salaries earned by residents in the area, averaging £49,812 annually, provides a rental affordability ratio of 10.5%.

This places Copeland at the top of the list of most affordable places to rent privately, followed by Ribble Valley in Lancashire with a ratio of 15.8% and Staffordshire Moorlands, where rents account for 15.9% of annual earnings on average.

The least affordable local authorities in which to rent a home were all found in London. In response to this, tenants in the capital often spread rental costs with others, resulting in London having the highest proportion of UK renters who share a property with people outside of their family.

In Kensington & Chelsea average annual incomes stood at £34,157 in 2021, while mean rents totalled £36,520 per year. This results in an affordability ratio of 106.9%, making the area England’s least affordable rental location by a considerable margin. Westminster was found to be second due to rent costing 81.1% of annual salaries on average while Hammersmith and Fulham made up the top three least affordable rental location with an affordability ratio of 60.7%.

Across England, the average salary of £30,264 equated to 32.1% of the average rent.

Analysing the figures at a regional level highlights how the north of England is home to all of the most affordable regions. Yorkshire & The Humber boasts the lowest rent cost to income ratio of 23.2%, followed by the North West at 23.4% and the North East at 23.8%.

London (50.2%), the South East (36.1%) and East of England (33.3%) were the least affordable.

Rental affordability by region

Region 2021 income  £ Mean rental  £ Affordability ratio %
Yorkshire & Humber 28,616 6,653 23.2
North West 29,288 6,853 23.4
North East 26,981 6,424 23.8
East Midlands 27,830 6,689 24.0
West Midlands 29,281 7,504 25.6
South West 27,451 8,952 32.6
East of England 30,801 10,268 33.3
South East 32,068 11,586 36.1
London 36,326 18,244 50.2

Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “Our rental affordability index shows considerable variation in how affordable privately rented homes are. A key influence on this is where properties are located with a general trend for more affordable housing being found in the north of England.

“The lower purchase prices for homes in regions such as Yorkshire and The Humber means that investors can keep rent prices relatively low while still covering their overheads.

“It’s important to acknowledge, however, that there is a limit to this, and the current economic conditions mean that it is becoming more expensive to manage a lettings business. Alongside supply of properties that is exceeded by demand, this is placing pressure on rents.

“The Government and industry must work together to facilitate investment that will boost the number of homes available to rent, giving tenants more choice and helping to regulate rental costs.”   

As expected, affordability correlates with property size, indicated by the number of bedrooms. Renting an average four-bed home in England costs 59.8% of salary, a three-bed 40.8.%, followed by properties with two bedrooms at 33.2%. One-bedroom homes equate to 26.4% of average salaries, studios 18.8% and a single room costs 17.4% of the average annual salary.

Top 10 most affordable areas in England

Area 2021 income  £ Mean rental  £ Affordability ratio %
Copeland  49,812 5,236 10.5
Ribble Valley 38,900 6,164 15.8
Staffordshire Moorlands 30,420 4,844 15.9
North Lincolnshire  29,996 5,136 17.1
Knowsley 29,100 5,216 17.9
Amber Valley 30,102 5,414 18.0
Northumberland 27,177 4,918 18.1
Ashfield  27,335 4,958 18.1
West Lindsey 30,660 5,650 18.4
Hyndburn  26,521 4,958 18.7

Top 10 least affordable areas in England

Area 2021 income  £ Mean rental  £ Affordability ratio %
Kensington & Chelsea 34,157 36,520 106.9
Westminster 45,295 36,722 81.1
Hammersmith & Fulham 39,005 23,694 60.7
Wandsworth 33,503 20,306 60.6
Camden 41,114 24,848 60.4
Richmond upon Thames 35,684 20,674 57.9
Ealing 32,114 17,800 55.4
Lambeth 35,627 19,742 55.4
Epsom and Ewell 29,084 15,994 55.0
Haringey 31,960 17,334 54.2

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 30 September 2021

Income data based on ONS House Price to Residence-based earnings Ratio for the year to 30 September 2021
 

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 £13 billion of assets under management and manages over 450,000 customer accounts.

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.