Although rents on the open market are still higher in cash terms, looking at percentage growth, tenants are seeing bigger rent increases when they renew their contract than when they move to another rental property.
However, as mentioned, new tenants are still paying more rent. Although the gap is closing, open market rents have risen at record rates in recent years. In April 2018, the average new tenancy was just 1.1% (£8) higher than the average monthly rent when renewing a contract.
But since then, rents for new tenancies have risen 38% while existing tenancies have gone up 21%. In the year to August 2023, rental price growth for properties on the open market was 12%. These massive increases have slowed down, and the average rise was 6.4% from the twelve months to April 2024.
If a tenant renews a contract at a rate of £1151 per month, this will be 13.4% or £178 less per month than the renters signing new contracts and moving into a new property. This difference has influenced more tenants to stay put, evidenced by the fact that fewer renters are moving compared to before.
Hamptons reports that the number of tenants moving home in 2023 and 2024 will be around 17% below the pre-pandemic average.
Further Reading: Find out more about buy-to-let topics, such as how to make a passive income or UK interest rates over time, with our latest guides and insights.
