Rent prices growing 5.2% faster than earnings

The latest research by Zero Deposit, the tenancy deposit alternative, reveals that the cost of rent has outpaced salary growth by 5.2% over the past 10 years, leaving renters significantly worse-off today than they were a decade ago

Zero Deposit has analysed the changing cost of rent in England* between 2014 and 2023 and compared it to the changing average salary* to highlight how dramatically the rising price of rent has, and continues to, outpace the increases in average earnings.

The data reveals that in the past decade, the average price of rent in England has grown from £742 a month in 2014, to £994 in 2023. This marks an increase of £252 per month or £3,024 per year. In percentage terms, this is a decade increase of 34%.

Meanwhile, the average annual salary in England has grown from £27,919 in 2014 to £35,955 in 2023.

This is a cash increase of £8,036 over a decade, equivalent to 28.8%.

As such, it can be revealed that in the past ten years, the rising price of rent has outstripped salary growth by 5.2%.

A regional analysis of the same data points and across the same ten-year timeframe shows that renters in some regions of England have seen rent prices outstrip salary increases at an even greater rate.

In the East of England, the average salary has grown by 27% since 2014 while the price of rent has grown by 43.1%, meaning renters in the regions are now 16.1% worse off than they were ten years ago.

In the South West, the gap between rent and salary has widened by 9.7% while the East Midlands (9.6%), South East (9%), North West (6.9%), and West Midlands (3.3%).

Despite the majority of tenants in England seeing rent prices grow at a faster rate than their salaries, there do remain three regions in which salary growth has actually outperformed rent values over the decade.

In London, the average salary has increased by 29.8% since 2014, while the price of rent has grown by 22.4%, meaning renters in the capital are, in theory, 7.4% better off today than they were a decade ago.

In Yorkshire & Humber, renters are 1.4% better off, while in the North East, salaries have outgrown rent increases by 1.1%.

All of this means that the proportion of income that is spent on rent in England has increased from 31.9% in 2014 to 33.2% in 2023; an increase of 1.3%.

Sam Reynolds, CEO of Zero Deposit commented:

“With rent prices rising at a faster rate than earnings, the issue of rental affordability is only getting worse. This means tenants are under increasing financial pressure in day-to-day life, but also means that the ability for them to put money aside is dwindling. In turn, this means that any aspirations for home ownership are served a significant blow as people have less opportunity to save for a mortgage deposit.

Unfortunately there is very little being done to address the issue and urgent action is needed if we’re to improve rental market affordability. Deposit alternative schemes are one option open to tenants to help reduce the initial upfront cost of renting but we can only do so much in reducing the high costs associated with residing in the rental sector.”

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