## Rent Costs Rise Sharply Amid Slower Income Growth

Research from Canopy’s Rental Affordability Index reveals that in 2025, UK renters paid an average of £10,580 annually in rent, equating to 41% of their take-home pay. This marks a notable increase from 36% in 2024, reflecting a £684 (6.9%) rise in rent payments, while net earnings grew modestly from £27,710 to £28,810. The data, based on over 119,000 working renters, compares post-tax income to rental outgoings to assess affordability.

Spending 40% of net salary on rent is widely regarded as the upper limit of affordability, indicating that many tenants are now at or beyond manageable financial thresholds. This trend signals increasing financial strain on renters, which landlords and agents should consider when evaluating tenant stability and market conditions.

## Regional Disparities Highlight London’s Affordability Crisis

The index underscores stark regional differences in rental affordability. London remains the least affordable area, with tenants allocating 48% of their income to rent despite the highest average earnings of £37,600. The South East follows at 44%, the East of England at 42%, and the South West at 41%. In contrast, northern regions such as the North East and Yorkshire and The Humber show lower rent-to-income ratios of 34% and 35%, respectively.

Canopy notes that affordability either worsened or remained static across all UK regions over the past year. For landlords, this suggests that tenant financial pressures are widespread but particularly acute in southern and urban areas, potentially affecting rental demand and arrears risk.

## London Boroughs Show High Rental Burdens

Within London, the average annual rent rose 10% to £15,684 in 2025. Every borough exceeded the 40% affordability threshold, with 12 boroughs seeing tenants spend more than half their earnings on rent. Enfield, Barking and Dagenham recorded the highest ratios at 55%, followed closely by Brent at 54%. Even Merton, the most affordable borough, stood at 45%, well above the national average.

These figures highlight the intense affordability challenges faced by London tenants and the potential implications for landlords regarding tenant retention and affordability-related turnover.

## Southern Cities Dominate Least Affordable Rankings Outside London

Outside the capital, southern cities continue to be the least affordable. Brighton has overtaken Bournemouth as the costliest location, with renters dedicating 47% of their income to rent. Edinburgh and Manchester have also entered the top 10 least affordable cities. Conversely, Durham, Doncaster, and Hull are among the most affordable urban areas, each with rent-to-income ratios of 32%.

For landlords and agents, understanding these regional affordability variations is crucial for setting realistic rent levels and managing tenant expectations.

## Expert Insight on Rental Affordability Challenges

Charlotte Benson, Canopy’s Customer Operations Manager, commented:
“Rental affordability has remained a challenge for most tenants, with our data highlighting how the percentage of take-home salary being spent on rent has increased across the nation. Tenants are being stretched to the outer limits of rental affordability as financial strain continues, and in certain areas the situation is becoming even more severe. Unfortunately, with high demand, limited supply and stagnant wage growth, rental affordability has not improved in the past year, particularly in the southern and highly urban areas.”

Her observations reinforce the ongoing pressures within the private rented sector, emphasising the need for landlords and letting agents to remain aware of tenant affordability issues.