Landlords ‘increasingly keen’ to bring rents up to market averages

Tenants renewing an existing contract saw rents rise by an average of 8.3% over the last 12 months, outpacing rental growth on a newly let property (6.4%), the latest Hamptons Letting Index reveals.

Nearly nine out (88%) tenants renewing an existing contract saw their rent increase compared to six out of 10 (61%) landlords who achieved a higher rent when a new tenant moved in.

PAYING LESS

Despite the increase the Hamptons Letting Index also reveals that tenants who stay put and renew their contract are still paying 13.4% or £178 pcm less on average than someone who moved into a new home.

However, these renewal increases are only just starting to close the gap with rents on the open market that have been rising significantly over the last 18 months.

Back in April 2018, the average tenant who moved into a new property paid just 1.1% (or £8 pcm) more than a tenant renewing their contract. Since then, open market rents have risen 38%, whilst rents on existing tenancies have risen 21%.

Aneisha Beveridge, Head of Research at Hamptons, says: “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.”

PROTECTED

She adds: “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.”

“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.”