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Renewing tenants experience steep rent rises

Tenants renewing an existing contract to stay in the same property are seeing their rent begin to catch up with those rents being achieved on newly let properties on the open market, Hamptons research shows.

Tenants renewing an existing contract in Great Britain saw their rent rise by an average of 8.3% over the last 12 months, outpacing rental growth on a newly let property (6.4%).

Those who stay are still paying on average 13.4% or £178 pcm less than someone who moved into a new home, at £1,151 per month.

Aneisha Beveridge, head of research at Hamptons, said: “Many tenants had enjoyed years of no or below-inflation rent increases, particularly when rents weren’t rising much on the open market and mortgage costs were falling.

“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.

“Tenants fortunate enough to be protected from higher rents by their landlord or longer contracts are increasingly seeing their rents rise. These increases for renewing tenants tend to be lower and stretched over a longer period than for newly let homes, often meaning tenants still pay below market rate. But even so, these hikes can still add up to hundreds of pounds a month.

“The large gap between market rates and what many tenants are paying is a big disincentive for them to move unless they have to. 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.”

Across Great Britain there are 28% more rental homes on the market than last year.

However there were 40% fewer homes available to rent than in April 2019, as private landlords sold more properties than they bought.

Inner London rents on newly let properties fell 2.8% on the same time last year, the only region in the country to record a fall.

This is the first time they have fallen on an annual basis since the easing of lockdown at the end of 2021, a period over which rents here have risen by 35%.