Rent increases still cheaper than moving house, new data reveals
The red hot rental market in the UK is prompting tenants to stay in properties and renew their contracts rather than move, as the costs associated with a new house mean paying an average of £178 per month more.
The data, from Hamptons' monthly rental price tracker, shows that 88% of tenants renewing an existing contract so far in 2024 saw their rent increase.
Meanwhile, the gap between moving and staying put could be narrowing, as the annual pace of rental growth on newly let properties continued to slow in April, with rents edging up 0.8% month on month. This marked the largest monthly increase this year.
Tenants renewing an existing contract in the UK 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%).
“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," said Aneisha Beveridge, head of research at Hamptons.
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"Landlords were often content with a small gap between the market rate for their home and what their tenant was paying," she added. "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."
Rental growth for newly let homes peaked at 12% in August 2023, with the pace of increases nearly halving since then to 6.4% during the year to April 2024. Tenants renewing an existing contract to stay in the same property are now seeing their rent begin to catch up with those rents being achieved on newly let properties on the open market, the data showed.
In 2022/23, 15% fewer tenants moved home compared to the five-year average between 2015 and 2019 (1.01 million compared to 1.19 million, according to the English Housing Survey.
The number of lets agreed more recently suggests that in 2023/24 the number of renters moving home will be around 17% below the pre-pandemic average, falling below 1 million moves, according to Hamptons.
Inner London was the only region which saw rental costs fall on average year-on-year.
The data comes following news that rental costs are set to outpace wage growth in the near future.
Alongside this recent data shows renting may be cheaper than buying in certain parts of the UK, as mortgage costs mount due to elevated interest rates.
Renting can be up to £2,000 per year cheaper in certain parts of the UK, with renters making the biggest savings compared to first-time buyers in the East of England where they are an average £2,325 better off each year, according to the Halifax Owning vs Renting Review published in March.
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