Tenant referencing provider Canopy has released data from a  rental affordability index, which claims most tenants are at the very limit of what experts believe is ‘affordable’.

Using almost 50,000 data points, the index paints assesses the correlation between take-home income and rental costs across the UK market.

It says that many experts advise that 40% of take home pay is considered the outer limit for affordability, and the new data shows that on average, 38.3% of take-home salary is now going on rental payments.

A further 19% of tenants across the UK are now spending over half of their salary on their rent. With an approximate 4.6 million privately rented households*, this suggests that roughly a million households are spending over half of their income on rental payments.

Stirling in Scotland is the UK’s toughest area for rental affordability, with the average renter spending almost two-thirds of their wage (62%) on rental costs alone.

Belfast is the most affordable city for renters in the UK, with the average tenant spending just over a quarter of their salary in rental payments (26.7%).

Analysis of the UK’s major cities reveals that almost all tenants are spending a third or more of their salary on rental payments.

In some major cities like Brighton, tenants are spending well over half of their wage on rent (60.7%).

Despite a high average rental cost in London of £1,205, a high average tenant income of over £45,000 per annum means that tenants in the capital have a slightly lower rent to income ratio than the national average (38.1% in London v 38.3% nationally).

Canopy chief executive Chris Hutchinson comments: “It is sobering to see that one in five tenants are spending the vast majority of their salary on rental payments, and it neatly encapsulates the tricky situation that many tenants with aspirations of home ownership are in. According to our latest data, renters are spending 38% of their income on rent vs 18% for homeowners paying mortgages. That highlights the financial pressure on renters, meaning less money is able to be saved to achieve their goals.

“Despite the price stability that further regulation would have on the market, there would likely be additional disincentives for landlords, leading to more leaving the market, and therefore reducing rental housing supply, or those remaining being less inclined to adequately maintain their properties. Where we could see positive change is towards longer tenancies for those who desire them, fostering greater security for families and communities.”

Areas where renters spend the highest percentage of their wage on rental costs (% of wage spent on rents):

1. Stirling: 61.8%

2. Gillingham: 61.2%

3. Poole: 60.7%

4. Gosport: 59.0%

5. Brighton: 56.9%

6. Canterbury: 55.8%

7. Ramsgate: 55.5%

8. Bideford: 55.3%

9. Barnet: 54.2%

10. Barnsley: 53.6%