Rental growth for new lets hit its lowest level since October 2020, but still rose 1.8% year-on-year, a report found.
According to Hamptons’ Lettings Index, it is the 18th consecutive month that rental growth has slowed, leading the average tenant moving home in the UK to pay £1,372 per month.
For tenants renewing contracts, rents rose much faster, with the average rent jumping 6% year-on-year. This is more than triple the increase for new lets.
The report found that the average rent at renewal stood at £1,263 per month, which is £109 less than a tenant signing a new contract.
Hampton said landlords were continuing to up rent paid by existing tenants to “close the gap with the value achieved if a new tenant were to move into the property”, with all regions barring Scotland seeing renewal rents rise faster than new lets.
The report stated that sitting tenants’ rents over the last five years have increased by 26.5%, which compares to 34% for new tenants.
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London has the widest gap between new lets and renewing contracts, with the former coming to minus 0.7% and the latter standing at 6.8%.
London was not the only region to report negative rental growth for new lets, with rental growth for new tenants slowing in Northern England as well. This has led the rental growth gap between the North and the South “steadily narrowing” over recent months.
| Greater London | £2,329 | -0.7% | £2,244 | 6.8% |
| Inner London | £2,806 | 0% | £2,764 | 5.1% |
| Outer London | £1,977 | -1.4% | £1,861 | 8.8% |
| South | £1,347 | 3.1% | £1,219 | 5.8% |
| East of England | £1,248 | 3.4% | £1,190 | 5.3% |
| South East | £1,480 | 2.5% | £1,306 | 5.5% |
| South West | £1,245 | 3.8% | £1,114 | 6.8% |
| Midlands | £1,019 | 3.7% | £918 | 7% |
| East Midlands | £972 | 2.8% | £887 | 6.8% |
| West Midlands | £1,061 | 4.5% | £953 | 7.2% |
| North | £947 | 3.5% | £835 | 4.6% |
| North West | £999 | 4.4% | £855 | 4.6% |
| North East | £830 | 2.4% | £733 | 5.3% |
| Yorkshire and the Humber | £930 | 2.6% | £855 | 4.5% |
| Wales | £867 | 0.2% | £798 | 3.9% |
| Scotland | £1,025 | 5.6% | £852 | 4.8% |
| Great Britain | £1,372 | 1.8% | £1,263 | 6% |
| Great Britain (Ex London) | £1,126 | 3.2% | £1,012 | 5.6% |
Rental growth pace ‘has likely bottomed out’
Hamptons said the upward trend in rental stock looks to be ending. There were 3% more homes on the rental market in Great Britain in January compared to last year, which is the smallest increase since August 2022.
The availability of homes in London has fallen by a quarter, the largest fall in the country, and could lead to a rise in rents during 2025.
Hamptons said that, nationally, there were 39% fewer homes available to rent compared to pre-pandemic, and for London, there has been a 48% drop.
It is also the first time that landlord purchases have fallen below double digits for the first time since records began in 2009, making up 9.6% of purchases in January.
This was most noticeable in London, where only 7% of purchases were made by a landlord.
Aneisha Beveridge, head of research at Hamptons, said: “The pace of rental growth nationally has likely bottomed out. There are some signs that growth outside London is slowly picking up again, but we’re unlikely to see it run at the same rate as it has over the last few years. Rather, a squeeze in the number of rental homes on the market has made securing a property more competitive than it has been in recent months.
“What happens to rents on newly let homes tends to play out in the renewal market around 18 months later. So we expect tenants renewing their contracts to face smaller increases in 2025 than they did in 2024. Over the past five years, the lag between the two markets has saved sitting tenants an average of £6,641 each year, a saving [that] would have been wiped out had increases in renewal rents tightly tracked new lets.
“New purchases by landlords have been depressed by increases in stamp duty rates towards the end of last year and the prospect of tighter regulation in the form of the Renters’ Rights Bill. While purchases by landlords haven’t completely dried up, it’s looking like higher stamp duty rates have reduced the share of homes sold to landlords by between 10% and 20%.”
