Key Takeaways

  • Propertymark's data shows the representative salary needed to rent an average London home fell from £86,250 to £71,550 in the year to June 2026, a drop of about 17 per cent.
  • Affordability improved even though London rents continued to rise, because pay in the capital grew faster than rents and because the measure tracks rent relative to income rather than the cash rent itself.
  • The North West saw a similar improvement of roughly 17.5 per cent, with Propertymark's Kim Lidbury cautioning that rents still sit well above historic levels.
  • Falling net migration, subdued new supply and a Bank of England base rate held at 3.75 per cent all shape the backdrop, but wage growth is the dominant driver of the reported change.
  • Analysis by borough suggests the gains are uneven, concentrated among higher earners, while tenants in areas such as Hackney still spend well over half their income on rent.

Summary

London rental affordability improved by about 17 per cent in the year to June 2026, according to Propertymark, whose data shows the salary needed to rent an average London home fell from £86,250 to £71,550. Affordability rose despite rents climbing because London pay grew faster than rents, and because the measure tracks rent relative to earnings. The gains appear concentrated among higher earners rather than broad-based.

Why has London rental affordability improved while rents keep climbing?

It sounds like a contradiction: rents in the capital are still rising, yet London rental affordability has reportedly improved by about 17 per cent in a year. The explanation lies less in cheaper homes than in how affordability is measured. According to figures published by Propertymark, the trade body for letting agents, the representative salary needed to secure an average-priced rental home in London fell from £86,250 in June 2025 to £71,550 in June 2026, a decline of roughly 17 per cent.

That headline figure has drawn attention precisely because it clashes with the lived experience of many tenants, who continue to see asking rents advertised at record levels. Understanding the gap between the two requires unpicking what an affordability measure actually captures, and being careful not to treat a single tracker as the last word on a complex, unevenly distributed market.

What the Propertymark figures actually claim

Propertymark's measure expresses affordability as the income a household would need to rent an average home without overstretching, rather than as the cash rent alone. On that basis the trade body reported that the salary required in London dropped by around 17 per cent over the year to June 2026. The North West recorded a comparable shift, with the figure falling from about £40,350 to £33,300, an improvement of roughly 17.5 per cent.

Kim Lidbury, president of ARLA Propertymark, framed the change as real but partial. She noted that the typical salary needed to secure a rental property had fallen across most regions compared with a year earlier, with London and the North West seeing particularly notable improvements. She also cautioned that affordability pressures remain significant, because rents continue to sit well above historic levels and demand for good-quality rental homes still outstrips supply.

How can affordability rise when rents do not fall?

The central mechanism is straightforward. Affordability compares rents with incomes, so it can improve in two ways: rents can fall, or pay can rise faster than rents. In London the second effect has done the heavy lifting. If average earnings climb more quickly than the cost of an average tenancy, the share of income absorbed by rent edges down, and the salary a lender or letting agent would deem sufficient falls with it, even as the rent itself ticks higher.

Measurement choices matter just as much. A ratio of rent to income behaves very differently from a cash figure, and the outcome is sensitive to the assumed threshold, whether that is spending no more than around 30 per cent or 40 per cent of gross income on rent. The base period chosen and whether the calculation uses advertised or agreed rents can also swing the result. Propertymark has not published the full detail of its calculation, so the 17 per cent should be read as an indicative tracker of relative pressure rather than a precise, audited statistic. It is a signal, attributed to one source, not an unqualified fact.

This is why affordability headlines can feel at odds with reality. A tenant renewing a tenancy at a higher rent will not experience an improvement in any personal sense, yet the market-wide ratio can still shift in their favour if typical incomes have moved up more quickly. Comparing rent with a mortgage on an equivalent home would produce a different answer again, since rising interest rates have made buying dearer and kept many households renting for longer.

  • Affordability measures relate rents to earnings, so faster pay growth can improve them even as rents rise.
  • The result depends on the assumed share of income a household should spend on rent.
  • A ratio-based measure can move in the opposite direction to the cash rent a tenant pays.
  • Regional and household averages hide wide variation between boroughs and income groups.

Wages, migration, supply and interest rates

Wage growth is the clearest driver. Office for National Statistics data pointed to UK average earnings growth of roughly 3.4 per cent in early 2026, and pay in London typically runs ahead of the national figure. Where salaries in higher-paying boroughs rose sharply, the income share consumed by rent fell even though monthly rents did not, which is exactly the pattern an affordability ratio is designed to pick up.

Migration has shifted the demand backdrop. The ONS reported that net migration to the UK has continued to fall from its recent peak, easing some of the pressure that pushed rents up rapidly in earlier years. Fewer new arrivals competing for a fixed stock of homes can slow rent growth at the margin, giving pay a chance to catch up, though London's underlying demand remains intense and turnover-driven.

Supply remains the persistent weakness. Propertymark and other letting agents continue to report more prospective tenants than available homes, a mismatch that keeps upward pressure on rents regardless of affordability metrics. Some landlords have left the sector in response to higher costs and tax and regulatory change, thinning the pool of rental properties and limiting how far improved affordability can translate into genuine choice for renters.

Interest rates sit behind all of this. The Bank of England held its base rate at 3.75 per cent in June 2026, keeping borrowing costs elevated for landlords with mortgages and for prospective buyers who might otherwise leave the rental market. Higher financing costs can be passed through into rents, but they also keep would-be first-time buyers renting for longer, sustaining demand and complicating any simple reading of improving affordability.

Is the improvement broad-based or concentrated?

The averages flatter the picture. Borough-level analysis of London earnings and rents suggests the gains are far from uniform. Higher-income areas such as Wandsworth and Camden recorded some of the largest falls in the share of income spent on rent, helped by strong local pay. In several wealthier central boroughs, tenants spend under 40 per cent of income on rent, so headline improvements land most comfortably where affordability was least stretched to begin with.

For lower earners the relief is thinner. In areas such as Hackney, renters were still estimated to spend well over half their income on housing even after year-on-year improvement, while a handful of boroughs, including parts of outer London, saw affordability deteriorate as local rents outpaced pay. A citywide 17 per cent figure therefore masks a divide: households whose pay has kept pace feel the benefit, while those on flat, part-time or insecure incomes see little change in what they can realistically afford. For key workers and younger renters without rapid salary progression, an average measure may simply not describe their market.

What improving London rental affordability means for tenants, landlords and policymakers

Taken together, the Propertymark data tells a nuanced story rather than a simple good-news one. London rental affordability has improved on a widely cited measure, driven mainly by wage growth and softer migration-led demand, but rents themselves have not fallen and supply remains tight. For tenants, the practical gain depends heavily on whether their own earnings have risen. For landlords and policymakers, the figures underline that affordability is a relationship between pay and rents, and that headline percentages should be attributed, interrogated and treated with care rather than read as proof the capital has become cheap to rent.