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Only London’s highest earners able to rent privately at affordable cost, ONS says

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Only the top 25% of earners in London were able to privately rent a property in the city at an affordable rate last year, according to official figures on costs across England.

Data from the Office for National Statistics revealed that for three-quarters of households, rents in the capital were set at a level equal to more than 30% of their income.

The ONS said it considered an area to have affordable private rent if tenants spend no more than 30% of their income on it.

Rents in some parts of the country dropped when the pandemic struck but in recent months agents have reported that costs have started to rise again.

Tenants were not offered the same payment breaks as mortgage borrowers during the early months of the crisis but were given protections from eviction.

A ban on landlords repossessing their properties has ended, and there have been warnings that families who had been receiving the £20 universal credit increase until it was discontinued on Wednesday could struggle to keep their homes.

The ONS data, which looked at median earnings among tenants before tax and median rents across the country from 2012-20, underlines how much of some households’ income goes on housing.

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Across England as a whole, the figures show a household with a median income could expect to spend 23% of their earnings on the median private rent. For the bottom 25% of earners, renting the same property would cost 38% of their income.

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In London, 38% of an average household’s income would be required to reach the average rent, while in the most affordable region, the east Midlands, the figure was 22%.

For most regions, the ONS said private rents had become slightly more affordable since 2013, but in eastern England affordability fell, with the sum households spend on rent rising from 23% to 26%.

Sarah Coles, a personal finance analyst at the investment firm Hargreaves Lansdown, said the figures showed rents were “ruinous” for all but the wealthiest households in London.

The average earnings could be skewed upwards by people on low incomes losing work during the pandemic, she said, so their earnings would not factor into the ONS’s averages.

“In 2020, on average, we spent just under a quarter of our income on rent,” she said. “However, the averages only tell a small part of the story. In reality, an awful lot of renters faced an uphill struggle, which has become even harder in the interim.”

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