Rental affordability has taken an unexpected turn in London and the North West, with new figures showing significant drops in the required annual salary to secure a typical rental property. Despite average rents continuing to climb, many areas have seen a notable improvement in affordability over the past year.
In London, the annual salary needed to afford an average-priced rental home plummeted by 17%, from £86,250 in June 2025 to £71,550 this year. This shift occurred despite average rents across inner and outer London increasing by 3.4% month-on-month, rising from £2,307 in May to £2,385 in June. It suggests that while rents remain high, wage growth or changes in the rental stock may be easing the burden for some tenants.
The North West recorded an even larger percentage fall in the required salary, dropping by 17.5% from £40,350 to £33,300 annually. Similar to London, rents in the region still saw a monthly increase, moving from £1,087 in May to £1,110 in June. In contrast, other regions such as Yorkshire and Humberside noted a 14.5% reduction in the needed salary, from £33,900 to £28,980, with average rents slightly declining from £976 to £966.
Kim Lidbury, President of ARLA Propertymark, highlighted the varied landscape across the UK's rental markets. While London and other areas continue to see rent increases, some regions are experiencing more stable pricing or modest declines. She pointed out the encouraging trend of lower salary requirements but warned that affordability pressures remain substantial due to high rents and demand exceeding supply.
The South East also registered an 8.3% decrease in the required annual salary, now £45,390, despite rents rising from £1,488 to £1,513. In contrast, Scotland saw a significant monthly rent drop, with prices falling from £1,257 in May to £1,186 in June. The regional disparities underscore the complex dynamics influencing the UK's rental market, driven by local supply-demand imbalances, economic conditions, and wage growth.
For existing homeowners, these figures primarily reflect changes in the rental market and may not directly impact their mortgage payments unless they consider renting out a property. Landlords will need to navigate regional variations, with strong rent increases in some areas potentially offset by affordability considerations impacting tenant choices. First-time buyers transitioning from the rental market might find improved affordability in some regions a slight relief, but high house prices remain a concern.