The rental sector has grown over the last decade, with private rents rising to different degrees across local housing markets but do the regional trends we see in the residential sales market mirror that of our rental market.
On average, 30% of net earnings is spent on rent today. This is in line with the average over the last decade. Tenants can only afford to budget a certain proportion of their earnings to rent, so there is a close link between affordability and earnings.
Stretched affordability and slower employment growth have kept rental prices close to 2014 levels, showing that earnings do have an important role to play in rent control. Although landlords cannot dictate rental prices, as rental levels are a function of earnings growth.
The good news for landlords is property does remain an attractive investment to those looking for assets that can match liabilities linked to earnings growth or inflation plus rents are set to continue to rise in line with earnings over the next few years. In fact, the rent in the Northern regions of England are at the most affordable for a decade!! Rented housing will remain strongest in the London and the South East areas as this is where barriers to homeownership are the greatest.