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Under pressure: The affordability challenges facing private renters

In the past 2 years, rents in the UK have risen by an average of nearly 8%. Here we look at different dimensions of rent-affordability pressure faced by tenants in the private rented sector.

In the late 1970s, prior to rent deregulation, average rents in the private rented sector were equivalent to around 11% of the average private renter’s household income. By 1993 this had climbed to 29%, before settling at between 24%-29% from 1994 through to 2007, and then climbing to around 30% after the Global Financial Crisis and settling at this higher level (Mulheirn et al., 2023).

By 2013-14, private renters were spending an average of 34% of their income on housing costs. This ratio has stayed relatively constant since, with renters in 2024-25 also spending 34% of their incomes on average on rent costs (MHCLG, 2025).2 This compares to an average of 19% of incomes spent on housing costs for mortgagors, and 28% for social renters (MHCLG, 2025).

Affordability ratios are particularly acute in London, where on average private renters were spending 46% of their incomes on rents in 2023-24 (MHCLG, 2024a).3

Since the Global Financial Crisis, the overall trajectory of private rental growth suggests that rapid real rental growth has not been the primary driver of affordability pressures for renters. In most years since 2008, private rents increased slower than overall inflation and broadly in line with earnings, meaning rents fell slightly in real terms and rent-to-income ratios remained broadly stable. This indicates that, at an aggregate level, affordability challenges in the past 15-20 years have been less about sustained real rent escalation and more about underlying levels of rents relative to incomes — as well as how rent increases are experienced unevenly by households and across geographies.4

Between 2008 and 2020 growth in private rents broadly tracked the growth in earnings but remained slightly below CPI inflation. As a result, private rents fell slightly in real terms over this period — though did not get meaningfully more affordable for renters thanks to sluggish real-wage growth lagging behind inflation.

Across 2022 and 2023, following the pandemic, overall inflation rose sharply, peaking at 9% across 2022 and 7.3% across 2023, while earnings growth also increased. Private rental growth began accelerating in 2022 and 2023, but lagged behind both inflation and earnings, meaning private rents fell in real-terms in these years.

Private rental inflation then peaked at 7.7% across 2024, at which point overall inflation had fallen closer to Bank of England target levels, at 2.5% on average across 2024. In 2025, private rental growth then slowed to 6.3%, albeit still growing much faster than long-term average rates of growth and higher than average inflation in these years. This meant that for the first time since the financial crisis average rents were higher in real terms than in 2008 — which likely reflects a combination of post-pandemic market adjustment, rising real wages, higher costs for repairs and maintenance, possible pass-through of elevated mortgage interest rates, and increased demand for rental housing.

Beneath this broad trend, regional variation in private rental growth remains significant, affecting affordability levels across the country. Private rents in London were higher in real terms between 2015 to 2020, and again from 2024, than they were in 2008; while in Yorkshire and the Humber and the North East of England rents have fallen in real terms — though also experienced substantial nominal increases since 2021.

Across regions, private rents are consistently higher as a share of average earnings in London and the South of England. Overall, the rent-to-earnings ratio is relatively stable over time, typically fluctuating by only a few percentage points. However, there is greater volatility in London, while the North East and Yorkshire and the Humber have seen modest declines in rents relative to average earnings over the past 2 decades.

Regional variation likely reflects the interactions of labour market conditions (employment rates and earnings growth), wider macroeconomic factors (such as periods of high inflation), housing supply and demand and demographic changes. While affordability pressures have marginally eased in some areas and intensified in others, the overall picture remains one of persistent, high rent-to-earnings ratios across England.

The Office for Budget Responsibility (OBR) forecasts that the recent trend of private rents increasing faster than inflation will continue, tracking growth in real earnings which are forecast to outpace overall inflation until the end of the decade.5 If these forecasts are borne out, it will mark a break from the post-2008 trend of flat or slightly falling rents in real terms, whilst maintaining the longer-term trend of rents broadly keeping pace with wages. For renters, the effect will be the same: rent costs continuing to take up a significant proportion of their incomes and eating into any welcome growth in wages.

Between 2027 and 2030, the OBR projects private rents to grow faster than CPI inflation (OBR, 2026), and broadly in line with wages. This suggests that private rents are likely to continue growing in real terms, and the affordability pressures on renters will be maintained.

Another key dimension of the affordability burden on renters as a group is the fact that the number of people living in the private rented sector has increased significantly over recent decades, as the proportion of people living in social housing and owner-occupied homes has declined. The result is that many more people are stuck paying private sector rents that are persistently high as a proportion of incomes — and for longer, with an increasing number of families living in the tenure.

The private rented sector grew by 2.7 million homes between 2000 and 2020 — now comprising a fifth of the total housing stock in England and Wales (Baxter et al, 2022).

Homeownership for young adults has contracted substantially, with the rate of owner occupation for young adults aged between 20-34 years old falling by 17 percentage points from 2000, to 27% in 2023-24 (Elliott and Baxter, 2025). Meanwhile social housing as a proportion of the overall housing stock fell from 31% in 1980 to just 17% in 2020 (Elliott and Baxter, 2025).

Households in the poorest third of incomes in their 30s have been particularly impacted by these shifts in tenure; over the 30 years between 1978-89 to 2018-19 the rate of homeownership for this group fell from 52% to 28%, and the share who are social renters fell from 41% to 29%, while the share of those private renting increased from 7% to 43% (Waters and Wernham, 2023).

Another consequence of this shift in the size of the PRS is that it is now home to just under a quarter (24%) of children in England, up from 8% in 2000 (DWP, Households Below Average Income, 2024). This means more families are living in insecure tenures and are faced with the high costs associated with private renting. Around 28% of families with children in the private rented sector couldn’t comfortably afford their housing costs, compared to 23% of private renters without children, and 14% of families with children who were buying with a mortgage. Four in ten (40%) of private renting families with children were worried they might have to move home in the next year, compared to a fifth of social renting families with children (20%) and around a tenth (9%) of those buying with a mortgage.

International data suggests that affordability pressures on renters, viewed through the lens of their relationship to incomes, are worse in the UK than in many comparable countries. 

OECD data in 2023 showed that 23% of UK private renters spend more than 40% of their income on rent, a higher rate than any other country in the group (Goodier and Sunnemark, 2023).

According to EUROSTAT data compiled by the Social Market Foundation, as of 2018 rents were higher as a proportion of incomes in the UK than everywhere in Europe except Norway and Luxembourg (Gollings and O’Regan, 2024).

Why this matters

High expenditure on housing costs relative to incomes drives high material deprivation, poverty rates and perceived economic insecurity:

71% of private renters who spend more than a third of incomes on housing costs (gross of HB) were in poverty after housing costs (compared to 17% who weren't) — and 46% experienced material deprivation versus 29% among those spending less than a third on housing costs.6

75% of private renters who said they could not comfortably afford their housing costs felt economically insecure, compared to 30% of those who could.7

Beyond these acute impacts, knock-on effects of high rent-to-income ratios are felt across the income distribution: difficulty saving for a deposit, less of a financial cushion if circumstances change, and less money to spend in the other areas of the economy.

Although there is support available via Universal Credit or Housing Benefit for some low-income households, the support does not extend to everyone who needs it. According to available government data, the group of lower-income private-renting households with high housing costs who didn’t report receiving targeted cash subsidies to support them with housing costs (Universal Credit or Housing Benefit) is larger than the low-income high housing-cost group currently reporting receiving these subsidies. Families may not be in receipt of these benefits because they have not applied for them despite being eligible, or because they are not eligible whether because of earnings levels, wealth levels or immigration status. It’s important to note that there is known undercount of benefit receipt in this data, so the actual numbers of households not receiving support will be somewhat lower than reported here.

Amongst private renters in the bottom 40% of incomes, who spend more than 30% of their incomes on rents, around 1.4 million currently report receiving support through Universal Credit or Housing Benefit — while around 2.1 million do not.11

Amongst those on lower incomes with high rent costs, a significant number of both those reporting Universal Credit and Housing Benefit receipt and those not reporting receipt live in properties costing more than the 30th percentile of rents for the size and location of their property — for example, properties that cost more than the level of support available through the Local Housing Allowance (LHA) rate, even in years when this level is uprated to reflect current rental prices.

Of those currently reporting receipt of Universal Credit or Housing Benefit, around 1 million households in the bottom 40% of incomes, paying more than 30% of their income on rent, live in properties in the 31st-100th percentile of rents for the size and location of their property.12 Of those not currently reporting receipt of Universal Credit or Housing Benefit, around 1.6 million households in the bottom 40% of incomes, paying more than 30% of their income on rent, live in properties in the 31st-100th percentile of rents for the size and location of their property.13

Even if LHA was rebased to median local rents, an estimated 450,000 high housing-cost, low-income households would still see a shortfall between their subsidy amount and their actual rent. 

And, even for those in receipt of Universal Credit or Housing Benefit who do live in properties in the 1st-30th percentile of rents for their area, the periodic freezing of Local Housing Allowance rates — used to determine the level of cash subsidy available through these schemes — creates cycles of worsening affordability.

Local Housing Allowance rates were frozen in 2024 meaning the level of support currently available reflects 30th percentile rents in the year to September 2023 — since September 2023 rents have increased by 16%.

It’s important to note that the inability of Universal Credit and Housing Benefit to support the full group of low-income households with rent cost pressures is in significant part a result of the loss of other subsidies from the housing system.

Three distinct forms of housing subsidy — measures to hold housing costs below market level — historically played a role in keeping costs affordable for low-income households: cash subsidies like the housing element of Universal Credit and Housing Benefit, affordable rents through social housing, and the regulation of rents in the private rented sector.

Since 1979, the value of the subsidy from the latter 2 of these (social housing and rent regulation) has fallen significantly, as a result of the depletion of social housing stock through the Right to Buy and the deregulation of almost all private rents. Though cash subsidies through the benefit system have expanded to pick up part of the slack, they haven’t replaced the value of the full subsidy these 3 mechanisms were providing. It’s estimated that if all 3 housing subsidies had remained at their 1979 levels as a proportion of total housing costs, by 2019-20 there would be an additional £14 billion of subsidy in the housing system (Mulheirn et al, 2023).

Why this matters

Our analysis shows that current subsidies, meant to support those on low incomes with their housing costs, are not effectively protecting recipients from acute housing affordability pressures.

For over half (54%) of private renters in receipt of Universal Credit in England, LHA did not cover their rent by November 2025 (Department for Work and Pensions, 2024). This means that many people are having to pay out of pocket costs to cover their housing costs and are therefore at a greater risk of rent arrears, financial distress, and homelessness.

According to Crisis and Health Equals, only 2.5% of private rented homes listed in England between April and October 2024 were affordable based on LHA rates, despite LHA being reset to the 30th percentile of local rents in April 2024, down from around 10% of 2- or 3-bed properties and 16% of one-bed properties in 2021-22 (Greenall, 2025). This means that for low-income families looking for a home to rent or private renters forced to move home, it will be almost impossible to find a home where they will be fully supported with their housing costs through the benefit system.

A lack of affordable housing is an instrumental factor in driving the record high numbers of people left to sleep rough, with an estimated 4,793 people sleeping rough in England on a single night in autumn 2025 (MHCLG, 2026a). Among the highest rates of rough sleeping are in cities where rents are usually the highest.

A shortage of affordable housing has contributed to families being placed in unsuitable and insecure accommodation, with a record number of children living in temporary accommodation — 134,760 households including 175,990 children (MHCLG, 2026b).

There are also significant housing cost pressures amongst low-income households who are beyond the reach of these subsidies.

Perceived housing cost unaffordability is most widespread amongst private renters who report receiving support via Universal Credit or Housing Benefit towards their housing costs: 41% say they do not have enough to cover their housing costs comfortably, compared to 22% of those who do not receive Universal Credit or Housing Benefit. That said, amongst renters who say they find it difficult to cover their housing costs, a majority report receiving no support through Housing Benefit or Universal Credit. This indicates that affordability challenges extend significantly beyond the reach of the benefit system — though it’s important to note that this dataset finds substantially lower reporting of UC or HB receipt than official statistics.

Three quarters (77%) of private renters who do not have enough to comfortably pay rent report that they are not in receipt of Universal Credit or Housing Benefit.14 Two thirds (67%) of private renters who do not have enough to comfortably meet housing costs and who do not receive support through Universal Credit or Housing Benefit towards meeting their housing costs, were in the bottom 40% of incomes.15

Rent increases between tenancies are far more common and landlords typically increase rents by a lot more than inflation, increasing rents much more steeply between tenancies than within them.

Tenants moving to comparable properties in similar areas are likely to experience significant above-inflation increases to their rental costs when they move: rents on new tenancies tend to be higher than those for existing tenancies. Landlords are more likely to impose increases between tenancies than within them, and the scale of increase tends to be much larger.

Around half of landlords reported increasing rents for re-lets in 2018 and 2021, jumping to 67% of landlords in 2024; with a median increase of 11% in 2024, and a quarter of landlords increasing rents by a fifth or more (MHCLG, 2018, 2021 and 2024).22

While average rents are around the same level they were in real terms in 2008, over time some private renters experience fairly substantial real-terms falls in rents, while others experience substantial real-terms increases.

Moreover, private renters move home more regularly than other tenures which in itself incurs substantial one-off costs to tenants. Shelter estimated that the average private renter paid £670 in unrecoverable costs for forced moves in 2024 (Shelter, 2024). The same research also estimated that around 40% of tenant moves are forced moves rather than by choice.

JRF is carrying out new analysis using the Understanding Society, the UK Household Longitudinal Study, to provide insights into the frequency and extent of rent increases experienced by private renters over a long period. This analysis will provide new insights into how and when rent increases play a role in affordability pressures for private renting households. The results from this analysis will follow in a future briefing.

Why this matters

In the context of rents taking up a high proportion of incomes, especially for those on lower incomes, rent increases can be the tipping point for tenants where rents become unaffordable – or affordable only with the sacrifice of spending on other important areas.

According to data from a Shelter/YouGov survey in 2024, more than half of all renters (56%) said they would not be able to afford their rent increasing by 10% or more, and a quarter (24%) said they would be unable to pay any more in rent without cutting back across other household bills (Molano-Avilan, 2025).

Research on the impact of rent increases on renters in the United States found that rising rents crowd out non-housing spending, with this effect most pronounced amongst renters who paid a higher proportion of their income on rent before their rent increase (Wheat et al, 2025).

Polling by You Gov for Shelter shows that rents in the private sector are unaffordable for many key workers, with 47% reporting they are only one pay cheque away from homelessness (Shelter, 2025).

Significant rent increases, experienced by a significant minority of tenants year-on-year, can contribute to a stronger sense of economic insecurity.

69% of private renters who reported experiencing a ‘substantial’ increase in housing costs in the previous 6 months said they felt economically insecure, compared to under half (45%) of those who didn’t. 38% of those experiencing a substantial increase said they couldn’t comfortably afford their housing costs, compared to 23% who didn’t.23

Exterior of four story block of flats in East London on a sunny day.

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