The North East is England’s most affordable region in which to privately rent a home, according to Paragon Bank.

Last year, earnings averaged £30,078 in the region and Paragon derived a rental affordability ratio of 23.5% by dividing this by £7,054, the average annual cost to privately rent a home in the North East.

Last year’s most affordable region to rent, Yorkshire & The Humber, has fallen to second place, while the North West now sits in third, down one place since 2021.

The East Midlands and West Midlands complete the top five most affordable regions.

Across the whole of England, an average annual income of £33,270 resulted in an affordability ratio of 32.9%.

Least affordable

London, the South East and the East of England retain their places as the three least affordable rental locations in England.

Average rents paid by tenants in London increased from £18,244 last year to £19,213. With earnings in the capital averaging £39,654 in 2022, London has an affordability ratio of 48.5%, down from 50.2% last year.

Richard Rowntree, Paragon Bank managing director of mortgages, said: “We see stark disparity between how affordable privately rented homes are in different parts of England, the North notably more economical than London and the South West.

“We also see how rent payments still represent a sizable proportion of monthly outgoings, the most significant in many cases. While we know that landlords often limit rent increases in order to keep good tenants and many understand the financial challenge their renters may currently face, they themselves are up against rising costs so a degree of rental inflation is unfortunately inevitable.

“Fuelling this, demand for affordable private rented sector (PRS) homes has peaked over the past few years and remains well above supply. This is why it is vital that housing policy is developed in a way that promotes high standards while making investment in the PRS an attractive option for responsible lettings business owners.”