Sitting tenants see rents rise towards open market rates – Mortgage Strategy

Tenants renewing an present contract within the UK noticed their lease rise by a median of 8.3% during the last 12 months, outpacing rental development on a newly let property (6.4%).

This is in line with the most recent Hamptons Monthly Lettings Index for April, which exhibits that 88% of tenants renewing an present contract to date in 2024 noticed their lease improve.  This compares to 61% of landlords who achieved the next lease when a brand new tenant moved in.

However, tenants who keep put and renew their contract are nonetheless paying 13.4% or £178 pcm much less on common than somebody who has moved into a brand new house.  This is decreasing the motivation for individuals to maneuver, Hamptons stated.

The annual tempo of rental development on newly let properties continued to gradual in April, nonetheless rents edged up 0.8% month on month.  This marked the most important month-to-month improve this 12 months, suggesting that the tempo of annual rental development could settle round this degree.

Commenting on the most recent figures Hamptons head of analysis Aneisha Beveridge stated:

“Many tenants had loved years of no or below-inflation lease will increase, significantly when rents weren’t rising a lot on the open market and mortgage prices have been falling.  Landlords have been typically content material with a small hole between the market charge for his or her house and what their tenant was paying.  However, during the last two years, robust rental development on the open market has meant that the hole between market rates and what some tenants have been paying rose considerably.

“Tenants lucky sufficient to be protected against increased rents by their landlord or longer contracts are more and more seeing their rents rise.  These will increase for renewing tenants are usually decrease and stretched over an extended interval than for newly let properties, typically which means tenants nonetheless pay under market charge.  But even so, these hikes can nonetheless add as much as tons of of kilos a month.

Beveridge added that the massive hole between market rates and what many tenants are paying was a giant disincentive for them to maneuver until they need to.  “Moving more and more means getting much less house for more cash.  While time will finally shut the hole between what sitting and new tenants are paying, it might take longer if rental development on the open market begins choosing up once more.”