Tenants in Britain now face larger rent increases from renewing their existing contract instead of moving to a new property, new figures show, as landlords move closer towards open market rates.
According to data from estate agent Hamptons, tenants renewing an existing contract in Great Britain saw their rent rise by an average of 8.3 per cent over the 12 months to April 2024.
This figure outpaced average rental growth on newly let properties on the open market, which came in at 6.4 per cent.
Rental growth for newly let homes peaked at 12 per cent last August, with landlords responding to higher mortgage rates by selling their property – limiting the pool of supply – or passing on higher costs to tenants.
Hamptons’ data showed there were 40 per cent fewer homes available to rent last month than in April 2019.
It added that almost nine in 10 (88 per cent) tenants renewing an existing contract so far this year saw their rent rise, while 61 per cent of landlords achieved a higher rent when a new tenant moved in – down from 80 per cent in 2023.
However, tenants who renew their contract are still paying an average of 13.4 per cent, or £178 per month, less than those who move, which Hamptons said partly explains why fewer tenants are moving.
The annual pace of rental growth on newly let properties continued to slow in April. However, rents still rose up 0.8 per cent month-on-month in their biggest jump this year. Hamptons said the increase suggested that the pace of annual rental growth may settle around this level.
Aneisha Beveridge, head of research at Hamptons, commented: “Landlords were often content with a small gap between the market rate for their home and what their tenant was paying. However, over the last two years, strong rental growth on the open market has meant that the gap between market rates and what some tenants were paying rose significantly.”
“The large gap between market rates and what many tenants are paying is a big disincentive for them to move unless they have to,” she continued.
“Moving increasingly means getting less home for more money. While time will eventually close the gap between what sitting and new tenants are paying, it may take longer if rental growth on the open market starts picking up again.”
The number of rental homes on the market across the country rose 28 per cent year-on-year in April, although growth has slowed since it peaked at 34 per cent in January.
Inner London was the only region to clock a fall in prices for newly let properties last month, dropping 2.8 per cent compared to the same period last year.
This marked the region’s first year-on-year fall since the end of Covid-19 lockdown rules in late 2021, after which rents surged 35 per cent.