Key workers, such as nurses and teachers, are being priced out of London and the South East as private rents soar beyond average wages.

The UK’s median private rent has crossed over the rental affordability threshold, which states rent should cost less than 30 per cent of gross annual income to be considered affordable.

However, research published by PwC revealed that the affordability ratio in London could reach 47 per cent by 2022 to 2023. Tenants in London aged between 22 and 29 are currently spending over half (53 per cent) of their income on private rents, decreasing the likelihood of being able to save for a house deposit.

According to PwC’s calculations, the salaries of teachers and nurses would need to increase by around £10,000 a year for current rents to be considered affordable. While London is generally considered the most expensive place to live in the UK, rents are also unaffordable for many professions in the rest of the South East, ruling out commuting to the capital from further afield.

Commenting, PwC partner and UK housing leader Robert Walker said: “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.”

PwC chief economist John Hawksworth added: “The last five years has seen rental affordability ratios deteriorate and, in the UK as a whole, the amount spent on rent over this period has grown by 8%, while at the same time earnings growth remains relatively weak and below levels seen before the financial crisis.

“This is not only having an impact on social mobility, it will also hinder national productivity growth in the longer term by preventing people from moving to places in the UK where they can be most productive.”

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