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Sitting Tenants See More Rent Rises in Current UK Buy-to-Let Market

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    88% of Renters Saw Rental Increases Upon Contract Renewal

    According to new research from Hamptons, tenants renewing their contracts are starting to see rental prices catching up with those on the open market.

    Considering previous trends, tenants renewing their contracts were often protected from higher rents due to longer contracts or a good relationship with their landlord. However, the extreme supply-demand imbalance has also started to affect sitting tenants.

    Hamptons report that in 2024, 88% of tenants saw an increase in their rent when renewing their contract, compared to 61% of landlords achieving higher rents when a new tenant moves in.

    Rapid rental growth has been touted as one of the biggest reasons to invest in a buy-to-let property. These trends in rental growth are key to consider when buying a buy-to-let property.

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      New Tenancies Still Have Higher Rents Than Sitting Tenants

      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.

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      What is the Outlook for the UK Rental Market in 2024?

      While rental growth has slowed significantly since last year’s record rate of increases, it still looks likely to continue on its upward trajectory at a faster rate than before the pandemic.

      The annual growth for newly let properties in Great Britain was 6.4% in April, slightly lower than the 6.7% growth seen in March. However, the month-to-month difference was the largest of this year, with 0.8% growth observed.

      Hamptons says they expect annual growth to stabilise at around 6% positive growth per year, much higher than the 2.5% average recorded pre-Covid.

      To find out more about the UK property market, take a look at our latest guides and insights focusing on topics such as available investment property in Cheltenham and available investment property in Oldham.

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      Jessica Ferris

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      Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.