South East: PwC report highlights rental affordability for key workers

PwC’s latest UK Economic Outlook has revealed the major affordability challenges facing tenants, with those working in certain key public sector professions being priced out of the South East. The report highlights the need and opportunity for a constructive plan to prevent a shortage of key employees such as NHS workers, teachers and police officers. 

Using the conventional benchmark that renting must cost less than 30% of gross annual income for it to be considered affordable, the report finds that an employee would need an annual salary of £23,800 to afford the median private rent in the UK, up £400 from 2017/18. 

In the South East, capital median private rents are well above 30% of income, making it extremely difficult for key professions to live in the area. Nurses and midwives had the worst rental affordability ratios in the South East in 2017/2018 at 34%, with prison service officers and primary teachers at around 33% . 

South East rental affordability ratio by key worker profession (2018)

Those aged 22 - 29 are also badly affected, on average spending over 35% of their income on private rent, compared to those in Yorkshire who on average spend just 22%.

Unaffordable rents means that many may be locked out of opportunities across the South East and London region, including difficulty commuting into the capital. This may result in implications for economic or social mobility.

Robert Walker, partner and UK Housing Leader at PwC, commented: “Looking ahead, reducing the cost of housing - both renting and purchasing a house - should be a priority and government and business should work together to improve affordability by increasing the supply of properties to put downward pressure on property price inflation. One lever the government could pull would involve working with housebuilders to ensure that the target for 300,000 new homes a year in England is met. 

"In addition, the taxation of residential property is now very complex, which our analysis shows is impacting the housing market and people’s ability to acquire, to upsize or to downsize. We need a coherent programme of property tax simplification and reform in order to help solve the housing crisis in the UK and provide an additional boost to the economy.”