New research from 2024, evaluated by LandlordBuyers.com, highlights that private rental prices have surged over the past year across England (8.5%), Wales (8.5%), Scotland (7.6%), and Northern Ireland (9.9%).
The general guidance is that tenants should not spend more than 30% of their monthly income on rent. However, in the following regions, renters are exceeding this threshold:
- London = 53.4% of salary on rent
- South East = 37.5% of salary on rent
- South West = 36.5% of salary on rent
- East England = 35.9% of salary on rent
- Scotland = 32% of salary on rent
- West Midlands = 31.9% of salary on rent
In contrast, certain areas in the UK still see tenants spending less than 30% of their income on rent:
- North East = 24.7% of salary on rent
- Wales = 24.8% of salary on rent
- East Midlands = 27.3% of salary on rent
- Yorkshire = 27.8% of salary on rent
- North West = 29% of salary on rent
Jason Harris-Cohen, Managing Director of LandlordBuyers.com, commented on the rental market, stating: “A North-South divide definitely still exists but the divide is tapering. Only in mid-September did estate agent Hamptons release data that showed the gap between rental values in the North and rental values in the South of England has narrowed to its lowest point in over a decade,” says Jason. “In fact, while it was still more expensive to rent in the South, Southern rents were only 37% more expensive than those in the North – down from 43% more in August 2023 and a peak of 55% more in November 2021.”
According to Jason, the future of the rental price gap will depend on several key factors. “One will be landlords themselves: which ones decide to exit the market and where their rentals are geographically located. Buy-to-let professionals are holding their breath ahead of autumn’s Budget. If pockets of landlords, perhaps mainly in the South, decide to sell, we could see supply restricted, values rise and the gap widen again.”
“On the other hand,” Jason continues, “if Labour gets to grips with levelling up, we may see the appeal of Northern towns surge, wages catch up with Southern counterparts and demand for property – both to buy and rent – increase.”
Jason also points to house prices as a crucial factor: “House prices will play their part too. Stagnating property and rental values in the South have been blamed for the rental value slowdown, whereas house price growth in the North has been broadly strong. If this trend continues, we could see Northern values increase further and approach something more like rental equilibrium across the country.”
“Regarding the disparity between wages and rental prices, the numbers show there is still a mismatch. While the Office for National Statistics reported wage growth at 5.1% over the three months to July 2024 – outpacing inflation at 2.2% – Goodlord found that the average cost of a new rental home in England was 7% higher in August 2024 compared to the same period in 2023.”
