The North East of England emerged as the most affordable region for private rentals last year, based on an analysis conducted by Paragon Bank.

Following closely behind, Yorkshire and the Humber, as well as the North West, secured second and third places, respectively.

In contrast, London, the South East, and the East of England maintained their positions as the least affordable rental locations.

According to the study, the average earnings in the North East in 2022 were £30,078, resulting in a rental affordability ratio of 23.5% when divided by the average annual cost of private renting in the region (£7,054).

This ratio experienced a slight decrease of 0.2% from the previous year, indicating that the rise in rental prices was offset to some extent by increased salaries.

Notably, the North East witnessed a more significant decline in rental affordability, causing the region to ascend two positions from third to first on Paragon's Rental Affordability Index. As a result, last year's most affordable region, Yorkshire & The Humber, moved to second place, while the North West dropped to third.

Conversely, no similar trend was observed at the other end of the index, as London, the South East, and the East of England retained their rankings as the least affordable regions to rent in England, respectively.

In London, average rents increased from £18,244 in the previous year to £19,213. Coupled with average earnings of £39,654 in 2022, London's affordability ratio decreased from 50.2% to 48.5%.

Paragon's Rental Affordability Index, which utilizes government data on average rent expenditure and gross annual earnings, found that rent constitutes 32.9% of the average salary (£33,270) across England.

Richard Rowntree, Managing Director of Mortgages at Paragon Bank, stated, "There is a significant disparity in the affordability of privately rented homes across different parts of England, with the northern regions notably more economical compared to London and the South West. While landlords often limit rent increases to retain good tenants, they face rising costs, which makes some degree of rental inflation inevitable."

Rowntree further noted that there has been a sustained peak in demand for affordable private rented sector (PRS) homes in recent years, far surpassing the available supply.