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Research by Hamptons reveals that over the past year, rents for renewal tenants in the UK have risen by 8.3%, surpassing the 6.4% increase for newly rented properties. Although renewal rents remain lower than those for new tenancies, the gap is narrowing as market imbalances drive rents upward. Private landlords are selling more properties than they are buying, reducing the number of available rental properties and increasing rent pressure on tenants.

Recent studies show that renewal tenants in the UK rental market are experiencing significant rent increases. According to Hamptons' survey data, renewal rents have risen by an average of 8.3% over the past year, exceeding the 6.4% increase for newly rented properties. This trend indicates that renewal rents are gradually catching up with new market lease prices.

Typically, renewal tenants benefit from lower rents, paying an average of £178 less per month compared to new tenants, which translates to a 13.4% rent differential. However, with the continuous rise in market rents, this advantage is diminishing. Hamptons' head of research, Aneisha Beveridge, points out that in previous years, tenants often enjoyed lower rent increases, especially during periods of modest market rent growth and declining mortgage costs. Landlords were generally content with the smaller gap between the rent paid by tenants and market prices. However, the strong market rent growth over the past two years has significantly widened the gap between market prices and the rents some tenants are paying.

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Aneisha explains, "Some tenants have been fortunate enough to avoid landlords' high rent demands or long-term contracts, but their rents are still rising. While renewal rent increases are lower and spread over a longer period compared to new leases, renewal tenants still pay below market rates. Nevertheless, these increases can add hundreds of pounds to monthly expenses."

The substantial gap between market rents and the rents paid by many tenants greatly deters them from moving. Moving often means spending more money for less space. Although time will eventually narrow the rent gap between existing and new tenants, this process may be prolonged if open market rent growth accelerates again.

Data shows that the number of rental properties available across the UK has increased by 28% compared to last year, but is still 40% lower than in April 2019. This reduction is primarily due to private landlords selling more properties than they are purchasing, leading to an imbalance between supply and demand. This imbalance further exacerbates rent pressures, making it more challenging for tenants to find suitable housing.

In Inner London, rents for newly rented properties have decreased by 2.8% year-over-year, making it the only region in the country to record a decline. This is also the first annual decline since the end of pandemic lockdowns in late 2021, a period during which Inner London rents surged by 35%. This volatility indicates that even in regions with significant market fluctuations, rents are adjusting and changing.

In conclusion, the UK rental market is witnessing substantial rent increases, particularly for renewal tenants, due to supply constraints and rising demand. While renewal tenants still pay less than new tenants, the gap is closing, putting added financial pressure on renters. Landlords selling more properties than they purchase is further tightening the rental supply, exacerbating the situation for tenants seeking affordable housing.