Regional markets are facing growing affordability pressures, with one in three essential workers spending over 30% of their earnings on rent
New research from socially conscious fund manager Thriving Investments and PriceHubble, has revealed over 550,000 essential worker households need more affordable rental housing. The study identifies where the gap between earnings and housing costs is most acute, pinpointing where the need for affordable homes is most acute.
The overall figure is made up of 313,000 essential worker households in the private rental sector that spend more than 30% of their income on rent, and 239,000 essential worker households currently priced out of the private rental market. The research defines essential workers by income, focusing on households earning between lower-quartile and median earnings
The UK’s housing affordability challenge has reached a structural tipping point. A third of essential workers are spending more than 30% of their earnings on rent, rising to 44% of workers in the most unaffordable areas. Historically, this has been an issue largely contained to London but is now spreading regionally – driven by sustained demand, constrained supply and widening gaps between incomes and housing costs.
London continues to dominate the unaffordability rankings by local authority, with Bristol the only area outside the capital sitting within the top 15. There is also a clear pattern of unaffordable areas moving up the M4 and M40 commuter belt.
Alongside sustained pressure in the south, cities such as Manchester, Birmingham and Leeds are experiencing increasing affordability pressures. In Birmingham, more than 10,000 lower-quartile essential worker households require affordable housing, while Leeds approaches 8,000 and Manchester nearly 6,000. There is also spillover to areas surrounding economic hotspots, with Salford and Stockport sitting within the top 15 local authorities outside of London for essential worker unaffordability, due to strong rental growth, an increased population, and sustained job creation pushing rents ahead of incomes.
The UK-wide research, first commissioned in 2024 and updated in 2026, is used both as a national essential-worker affordability barometer, and as a tool to indicate where essential worker housing is needed, and where it will have most impact.
Thriving Investments commissioned the research to better understand where affordable rental housing for is most needed and where targeted investment can have the greatest impact. As a specialist living sector fund manager, Thriving Investments delivers high-quality homes across a range of tenures and investment platforms, including shared ownership, market rent and discount market rent, with a focus on meeting the needs of households whose incomes are not adequately served by the current housing market.
The 2026 research focuses on households earning lower quartile to median earnings and presents a renewed case for targeted capital to provide homes for those essential workers who keep the UK’s economic centres and public services running.
Catherine Webster, CEO at Thriving Investments, said: “Our affordability research highlights a clear alignment between investment opportunity and social need. Across the UK, there is a shortfall of housing for middle-income households – a vital segment of the workforce that is increasingly underserved by the current market.
“For investors, the opportunity is to respond to that need with long-term capital that is carefully targeted to the places where affordability pressures are most acute. These are often areas with strong employment, constrained supply and sustained rental demand — the fundamentals that can support resilient income while delivering meaningful social value. “Affordable rental housing has an important role to play in supporting local economies. When essential workers can live closer to where they work, employers, communities and public services all benefit.
“The challenge now is to bring together investors, housing providers and the public sector to deliver more homes in the places they are needed most. Done well, this is an opportunity to align financial returns with lasting social impact.”
Julia Middleton, Real Estate Economist at PriceHubble, added: “While prior high rental growth rates have eased, this hasn’t yet moved the dial on improved affordability.
“In many regional cities, we’re still seeing structural imbalances persist, with constrained supply continuing to put upward pressure on rents relative to incomes. Any easing in the rate of deterioration doesn’t take away from the large-scale need for more affordable rental housing across the country.”