The UK rental market has grown by 28 per cent year-on-year despite the rate of increase slowing down, research from Hamptons has found.
The research, Hamptons Monthly Lettings Index - April 2024, found there were 28 per cent more rental homes in the 12 months to April 2024 when compared to the same time period in 2023.
This came despite the rate of increase slowing, having peaked at a 34 per cent year-on-year increase in January 2024.
The research pointed out that longer-term downward pressure on stock levels persisted as there were 40 per cent fewer homes available to rent than in April 2019 as private landlords sold more properties than they bought.
In percentage terms, tenants are now facing bigger rent rises when they renew their contracts rather than moving home.
The research found while the rent on newly let homes increased by 6.4 per cent over the 12 months to April 2024, the average rent paid by a tenant renewing their contract rose by 8.3 per cent.
This means a tenant renewing their contract is paying £1,151 per month on average, but this is still 13.4 per cent less than a tenant signing a new contract to move into a new home.
This gap equates to £178 less per month, saving a tenant who stays put £2,135 per year on average, which partly explains why fewer tenants are moving.
Hamptons head of research, Aneisha Beveridge, 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.”
She added that 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 disencentive for them to move unless they have to. Moving increasingly means getting less home for more money,” Beveridge added.
“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.”
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
