The North East of England emerged as the most affordable region to privately rent last year, according to an analysis by Paragon Bank.
Yorkshire and the Humber and the North West trailed closely behind, coming second and third, respectively.
In contrast, London, the South East, and the East of England maintained their positions as the least affordable rental locations.
The average earnings in the North East in 2022 were £30,078, leading to a rental affordability ratio of 23.5% when divided by the average annual cost to privately rent a home in the region (£7,054).
This ratio represents a slight decrease of 0.2% from the previous year, showing that the increase in mean rents paid by tenants was largely offset by the yearly rise in salaries.
This decline in rental affordability was more pronounced in the North East, leading to the region ascending two places from third to first on Paragon’s Rental Affordability Index.
This shift pushed last year’s most affordable region, Yorkshire & The Humber, to second place, while the North West fell to third.
However, the same trend was not observed at the other end of the index. London, the South East, and the East of England retained their rankings as the first, second, and third least affordable places to rent in England, respectively.
In London, average rents increased from £18,244 in the previous year to £19,213. Coupled with average earnings in the capital of £39,654 in 2022, London’s affordability ratio decreased from 50.2% last year to 48.5%.
Paragon’s Rental Affordability Index, which utilizes government data on average rent expenditure and gross annual earnings, found that across England, rent constitutes 32.9% of the average salary of £33,270.
Richard Rowntree, Paragon Bank managing director of mortgages, said: “We see a stark disparity between how affordable privately rented homes are in different parts of England, with the north being notably more economical than London and the South West.
“Although landlords often limit rent increases to retain good tenants, they are facing rising costs, making some degree of rental inflation inevitable.”
He added that demand for affordable private rented sector (PRS) homes has peaked over the past few years and remains well above supply.
