Soaring Cost-of-Living Squeezes Rent Affordability

Tens of thousands of private tenants are struggling to keep pace with the rising cost of living as rent and bills increase to take an ever-larger share of their earnings. 

As a litre of diesel hits 151.6p and energy prices soar to new record levels, more than three out of four households renting a home confess most of their income goes on essential bills, and the amount is set to grow.

The survey by estate agents Benham & Reeves found that private tenants spend an average:

●      £808 a month or 26 per cent of household income on rent

●      £1,138 a month on essentials, like food, utilities and transport, but not including eating out, alcohol or other luxuries

Adding the figures, the average household renting a private home pays 63 per cent of income (£1,946 a month) to cover housing costs and essential bills.

Where is the least affordable place to rent?

The least affordable place to rent a home is in the South-West.

The region may have magnificent beaches, quaint fishing villages and good summer weather, but living there costs a family 73 per cent of earnings - slightly more than second-placed London at 72 per cent of earnings.

Wales has the most affordable homes to rent. Rent and essential bills come to £1,559 a month there - or 58 per cent of income.

The estate agency director Marc von Grundherr said: “Although we saw rents drop across many areas of the UK during the pandemic, they’ve once again started to climb as Covid restrictions have eased and tenants have headed back to the workplace. At the same time, inflation has caused the wider cost of living to increase considerably, putting additional pressure on the financial stability of those living within the rental sector.


“While London is notoriously expensive when it comes to renting, the higher earnings available in the capital mean that it’s not the worst area of the UK when it comes to the overall cost of renting in relation to household income.


“Our research only considers the bare essentials in terms of household outgoings and so the reality is that many rental households will have an even smaller proportion of income left once they’ve accounted for the other costs associated with modern life.”

How much tenants have left to pay the rent?

The table breaks down average monthly income and spending around the UK.

The South West and London are coming close to the limits of tenant affordability, which is considered unsustainable at 35 per cent of net income (what’s left after paying taxes).






Spending as % of income

South West












East Midlands






West Midlands






South East






Yorkshire & Humber






East of England












North East






North West


















Source: Benham & Reeves

Protecting against rent arrears

Many experts predict a rising number of tenants will default on paying their rent as fuel bills climb even higher to take a much larger slice of household income.

Rent guarantee cover - also called tenant default insurance - can help.

The policy pays missed rent and settles legal fees for evicting the tenant.

Costs, terms and conditions vary between providers.

The cover is usually taken out at the start of a tenancy, but some providers will insure existing tenants.

Rent guarantee insurance costs around £75 a month.

View Related Handbook Page

Rent Setting

The landlord and contract-holder should agree on the initial rent. When considering the rent to charge, a landlord should consider what repairs and other outgoings are likely to ensure sufficient income. This needs to be balanced with current market conditions.

Investing in a Property

Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.