The data also suggests that pockets of affordability are arising in the North East of England, Scotland and Wales, where there is greater parity between incomes and rental prices.
The HomeLet Rental Index, the largest monthly survey of private tenants in the UK, shows that the average UK private home rent rose by 6.3% over the year to June 2014. The average rent in the UK now stands at £862 a month, compared to £811 a year ago.
While this figure was inflated by very large rental increases in Greater London, where rents are up by 11.2%, rents have risen year on year in ten out of 12 regions of the country, with only the North East of England and Scotland seeing minor falls in rental prices.
The London market continues to race ahead with the average monthly rent in Greater London being £1,412, compared to £694 for the rest of the UK (excluding London), meaning that London rental prices are now more than double those of the rest of the UK for the very first time. When comparing average rental prices to average tenants’ incomes, Greater London represents the least affordable rental market in the UK, with the average tenant’s gross income being just 2.23 times the average annual rental.
Other regions feeling the squeeze on affordability are the South West and South East of England with the average tenant’s gross income being 2.55 times and 2.93 the average annual rental value in the respective regions.
Martin Totty, CEO of Barbon Insurance Group, said: “The private rental sector continues to show strong growth with rental values increasing year on year across the country, with little exception.
“Although average incomes have also been rising, there are parts of the country where we are seeing affordability getting tighter.
“As a rule of thumb, for a rental property to be affordable, a tenant’s gross income must be at least two and a half times his or her annual rent. Our data shows that rents in London have pushed beyond that boundary, with the South East and South West of England close behind.”
And he added: “The options for Londoners who are looking to rent in the capital are often to consider sharing their home, or seeking a guarantor to secure the tenancy.
“Alternatively, tenants looking for more affordable rental properties and a greater parity between incomes and rents could consider looking further afield to other regions of the UK such as the North East of England, Scotland, Northern Ireland and Wales.
“These regions currently offer comparatively good value for tenants and may, as a result, see growing demand in the months to come both from tenants and from landlords looking for profitable places to invest.”