Private rent rises are still outpacing earnings, with renters in London and the Welsh Valleys facing the biggest affordability wedges in Britain

Private rent rises continue to outpace earnings, as they have now for 21 months running, creating a rent affordability wedge of almost £720 a year, the Resolution Foundation said today (Wednesday), in response to the latest ONS private rents data.

Over the longer term, private rents continue to closely track earnings. Rents and earnings both grew quickly in 2022, but a gap opened up in 2023 when wage growth started to slow while rents continued to soar. Since May 2022, rents have risen by 25 per cent, compared to earnings growth of 19 per cent, leading to an ‘affordability wedge’ of 5.6 percentage points. Had rents risen in line with earnings, private renters in Britain would be paying almost £720 less in rent a year.

This growing affordability wedge for renters comes despite the welcome recent slowdown in the growth of private rents. Average rents increased by 5.9 per cent in the year to July 2025, down from a peak growth rate of 9.1 per cent in the year to November 2024.

The most recent ONS data reveals that since May this affordability wedge has been concentrated in the capital, with six London boroughs featuring in the top ten local authorities with the biggest gap between earnings and rent growth. In Tower Hamlets, earnings have grown by 18 per cent while rents have grown by 35 per cent since May 2022 – a 17 percentage point gap.

But affordability strains were not confined to London, with areas in the Welsh Valleys also seeing big increases in rents. The affordability wedge is widest in Torfaen where rents have increased by 40 per cent since May 2022 while earnings have only increased by 21 per cent (a 19 percentage point gap). Had rents risen in line with earnings, private renters in Torfaen would be paying £1,300 less in rent a year. A similar trend is seen in neighboring Rhondda Cynon Taf.

Rents aren’t outpacing earnings everywhere, with a third of local authority areas – including the Derbyshire Dales and Hartlepool – seeing earnings growth outpace rent growth, easing the pressure on local private sector renters.

Even so, the Foundation warns that the affordability wedge for renters across Britain is a major drag on living standards. Strikingly, nearly one-in-four families with children now live in the private rented sector – a huge increase from the one-in-twelve who did so in 2000. Previous Resolution Foundation research has shown that 1.1 million children are growing up in poverty as a result of high housing costs.

Despite these pressures, the Foundation notes that Universal Credit support for housing costs has been frozen since April 2024, compounding the squeeze on low- and middle-income renters. Further details on these trends and more can be found in the Resolution Foundation’s new Housing Indicators, tracking how housing is affecting living standards in the UK.

Felicia Odamtten, Economist at the Resolution Foundation, said:

‘’Despite a recent slowdown in growth of private rents, monthly payments continue to rise faster than monthly pay cheques, creating an average housing affordability wedge of almost £720 a year for private renters across Britain.

‘’From London to the Welsh Valleys, the growing affordability wedge is putting real financial pressure on local residents in private rented accommodation.

‘’With one in four households with children now living in the private rented sector, this affordability gap will continue to add to the cost-of-living pressures facing families.”