COST OF RENT DAY - 2025

Cost of Rent falls on the 6th of May.

And, London Cost of Rent Day is approaching - this year it falls on 27th of May

Cost of Rent Day Explained

English renters work 125 days of the year solely to pay their landlords;

Cost of Rent Day is the day on which, on average, renters in England earn enough before tax to cover their annual rent bill;
Cost of Rent days have been calculated for 10 regions across England and Wales and for each Local Authority in London;
This analysis of local areas shows Cost of Rent Day is even later in England’s major cities and the South East;
For example, Cost of Rent day in London is the 27th of May, 21 days after the national average;
The lowest region is the West Midlands, where the average Cost of Rent Day is the 4th of April;
Calculating Cost of Rent Day, and broader Cost of Housing Day is more challenging than it ought to be. As a basic recommendation the ASI proposes that the ONS should start producing consistent housing statistics that:

Cover the whole UK, not just England;
Avoid local area data gaps;
Enable a better understanding of gross annual incomes, and how they are spent on taxation, housing, and other key components (fuel and power, transport, food, recreation, hospitality, clothing, health, education etc.);
Focus on the quality and cost of housing to help inform policymakers;

It is now incumbent on policy makers to fix the housing crisis, in particular, addressing the shortage of supply of homes;

What is Cost of Rent Day?

Cost of Rent Day is the day when, on average, English renters stop paying rent and start putting their earnings into their own pocket.

This year, we have estimated that every penny that, on average, renters earned before tax for working before and including May 5th went to their landlord- from May 6th they are finally earning for themselves.

This is a measure that the Adam Smith Institute created to help translate the severity of the housing and rental crisis into simple terms that can be easily understood by all audiences. It provides a useful measure to hold politicians to account and track changes over time.

Cost of Rent Day does not take into account the ever-rising tax burden on workers.

For years the ASI has also calculated Tax Freedom Day and Cost of Government Day, in order to highlight another equally pernicious way that poor policy choices are eating into our paypackets. After taxes and rents, workers are left with very little. In the midst of a cost of living crisis, and nearly two decades of stagnation, ‘Cost of Rent Day’ is another damning indictment on the performance of the British economy. It must be fixed with renewed vigour.

To calculate the Cost of Rent Day, annual rents were divided by gross annual pay, to understand what proportion of earnings are spent on rent. Cost of Rent Days were calculated for 10 regions across the UK.

Many of the policies which are touted as the solutions to ever rising rent costs are actively counter-productive. In particular, just as our economic analysis warned, rent controls have been consistently harmful in practice

The root problem is the lack of supply. Since the 70s, England’s construction of new homes has lagged behind population growth (including net migration). In other words, new demand has outstripped supply.

Politicians must focus on creating the right incentives for developers and landlords, and on increasing supply. As we outline below, the ASI has previously put forward a number of solutions which tackle the underlying causes of the rental crisis. We encourage all policymakers to actively consider them as a matter of urgency.

ASI has drawn upon the available data to enabled comparison over an eight-year period.

Regional analysis

Policy implications

The Cause of High Rental Costs: A Lack of Supply

The root problem driving Britain’s housing crisis is the lack of supply. Centre for Cities' analysis, highlights concisely the pivotal shifts in policy and practice that have led to the current situation. By the start of 2023, the UK’s backlog of missing homes had reached 4.3 million homes, a deficit that would take at least half a century to achieve, even if the government reached its target of 300,000 new homes a year.

The post-World War II introduction of the Town and Country Planning Act in 1947 marked a significant turning point, establishing a discretionary planning system that has since been fundamental in shaping the UK's landscape. This system is characterised by its restrictive nature, significantly limiting the supply of new homes by requiring case-by-case decision-making for planning permissions, which slows down and reduces the development of new housing.

Furthermore, the decline in council house building, which began well before the policies of the 1980s, such as Right to Buy, contributed to a reduced overall housing output. Initially, council housing accounted for a substantial portion of new homes, but as policy focus shifted and funding decreased, so too did the output from this sector.
Additionally, the private sector, which could have compensated for the decline in public housing production, also faced numerous barriers. These included high costs of land, increased regulatory burdens, and the economic risk associated with large-scale development projects. These factors have consistently kept private sector house building rates below necessary levels to meet demand.

Moreover, economic and demographic shifts, such as increased urbanisation, immigration and changes in household compositions, have outpaced the supply of new housing. The combination of a restrictive planning system and the decline in both public and private housebuilding has resulted in a chronic undersupply of housing, exacerbated by the rising demand due to population growth and economic changes.

These historical and systemic issues point to the need for significant reforms, particularly in planning policies, to enable a major increase in housebuilding rates to address this long-standing issue.

What Not To Do - Rent Controls

“Rent control appears to be the most efficient technique presently known to destroy a city—except for bombing” - Assar Lindbeck

In response to housing crises and high rents, it is common to seek populist resources. One such intervention is to impose rent controls. These can be popular promises to limit rent rises. Economics teaches us this is profoundly misguided and only makes the root problem worse, as we have repeatedly outlined.

Rent controls have been tried, and have consistently produced bad results. Rent controls lead to a shortage of rental accommodation and a deterioration in its quality.

The reason why rent controls are so harmful is simple - rent controls mean landlords are forced to charge prices below the market rate. This fundamentally changes their incentives, meaning they invest elsewhere and some withdraw altogether. The supply of rental properties is even more constrained or falls. Quality is also reduced as landlords are forced to cut back or delay maintenance and renovation, because it is unprofitable. All the while, demand is unaffected or even boosted.

The role of landlords

Cost of Rent day is not intended as an attack upon Landlords.

Landlords often come under scrutiny in discussions about the housing market, yet their role is essential in ensuring the availability of quality, affordable housing. Economics tells us landlords are not just necessary, but are beneficial to a housing ecosystem.

Landlords invest substantial capital into the housing market, which is crucial for the maintenance and expansion of housing stock. By purchasing and upgrading properties, landlords not only enhance the quality of living environments but also absorb significant financial risks. These risks include potential vacancies, non-payment of rent, and fluctuations in property values. This deployment of capital and assumption of risk facilitate market functioning and contribute to the overall stability of the housing sector. They play a critical role in the efficient allocation of housing resources, assessing market demands and providing properties that align with consumer preferences and affordability.

Rental properties offer essential flexibility for a mobile workforce, particularly beneficial for individuals who need to relocate for employment without the burden of selling a home. This flexibility supports economic growth by enabling a more agile and responsive workforce. Professional landlords invest in the regular maintenance and management of their properties, which contributes to the overall desirability and safety of the living environment. Well-maintained properties also support higher property values and contribute to the aesthetic and practical appeal of communities.

Investments made by landlords also stimulate local economies. This includes employment for property management, construction workers, and maintenance staff, and increased business for local suppliers and service providers.

This defence does not extend to all landlords indiscriminately. Especially in the midst of a housing crisis, where competitive forces are diminished, there exist landlords who offer substandard properties that are poorly maintained, and others may even breach contractual agreements. These practices can exacerbate the difficulties faced by tenants, undermining the integrity of the housing market and furthering calls for aggressive intentions.

While it is crucial to address and even prevent practices that illegitimately disadvantage tenants, understanding and appreciating the role of landlords within a functioning housing market is equally important. By investing capital, managing risks, providing housing, and stimulating economic activities, landlords contribute significantly to the functioning and health of both local and national economies. By viewing landlords through this economic lens, we can appreciate their role as essential contributors to the housing market's vitality and stability.

Our ideas to solve the crisis

The ASI has published extensive research on housing to help inform policy makers and academics. Highlights include:

Enhancing this analysis

The housing crisis extends beyond renters. It is too challenging to get on the housing ladder. The homes which people are able to buy are smaller, more remote, in worse condition, and more expensive than they should be.

The ASI is analysing the broader “Cost of Housing'' day, but data and modelling complications make this estimate much more challenging to produce in a simple and consumable way. Similarly, The ASI is also analysing the “Cost of Rent day for the wider UK (not just England), and for missing local areas, however ONS data sources have inconsistencies and gaps that hinder the production of consumable estimates (produced with the same data sets, and using the same method). These issues are explored further in the methodology section below.

The ASI recommends that the ONS should start producing consistent statistics that:

Cover the whole UK, not just England
Avoid local area data gaps
Enable a better understanding of gross annual incomes, and how they are spent on taxation, housing, and key components (fuel and power, transport, food, recreation, hospitality, clothing, health, education etc.)
Focus on the quality and cost of housing to help inform policy makers

Methodology

To calculate the Cost of Rent Day the proportion of income of private renting households equivalent to private rent was translated into a proportion of days of the year, which provides the final cost of rent day figure.

For example across England, if mean monthly rent is £1,178, then that implies annual rent of £14,136. With a median income of private renting households of annual pay or £3,448 (or £41,376 annually), that means 34.2% is spent on rent.

To balance for leap years and support better inter-year comparisons, a year is treated as being 365.25 days long.

Using otherwise unrounded inputs, this calculation implied that 125 days of the year are spent on rent. The 126th day of the year is May 6th.

Data Tables

To enable tracking of the crisis in London specifically, we also provide a filtered table for London’s cost of Rent Day

Data Sources

To produce this analysis, the ASI used the “Proportion of income of private renting households equivalent to private rent, England and Wales, Financial Year Ending 2015 to 2023.” This provided the private rent prices by country and English region, expressed as a percentage of gross monthly income of private renting households.

In previous years the "Private Rental Market Statistics" data set was used in combination with “Annual Survey of Hours and Earnings (ASHE).” But the “Private Rental Market Statistics data set was discontinued in 2024, hence the new approach.

Simplifications

With the current data set there is a lag time. The analysis for calculating 2025’s Cost of Rent day, is based on data published in 2024 and so on. This is because we want to identify the day during the year in which it takes place, and celebrate its passing. We do not have access to live data.

This analysis also does not adjust for the fact that the ONS data sources do not mirror a calendar year. For example, the rental data for year N is taken from between October N-2 and September N-1.

The rental data the ONS provides in our new data set is the mean not the median, making it more vulnerable to skews in the distribution.

Limitations in comparisons

Historic reporting of Cost of Rent Day may have been based on different data sources, or prior to ONS data revisions, so can appear earlier or later than in ASI's latest analysis. The Cost of Rent day for a given year in the past therefore may well have changed - typically the changes are very small, and the overall picture tends to be robust to these alterations. For the purposes of monitoring the trend of Cost of Rent Day and making inter-year comparisons, our latest analysis is most appropriate, as shown in the chart above.

Another challenge is that the sample size used for the ONS rental data is limited meaning we cannot compare the data effectively across time periods or between areas. As a result, the local area Cost of Rent days should be taken as indicative, and one should not read too much into differences.

Intentions

As the methodlogical complexities detailed above suggest, Cost of Rent Day does not correspond exactly to any individual’s experience. And yet many people do find it shocking to see how high rents are, expressed in an intuitive way.

About the authors

James Lawson is Chairman of the Adam Smith Institute. He first developed and produced Cost of Rent Day as a way to explain the housing crisis and provide an independent non-partisan metric to hold politicians of all parties to account for its resolution.

Sam Bailey is a Research Associate who supported in refreshing the analysis for 2025.