But renewal rents rise three times faster than new lets
The average rent paid by tenants moving into new properties in Great Britain rose by 1.8% in January 2025 compared to the same period last year – marking the slowest annual rental growth since October 2020, residential estate agent Hamptons has reported.
This slowdown represents the 18th consecutive month of decelerating rental growth, with the average monthly rent for new tenancies now at £1,372.
Tenants renewing existing contracts continued to face faster rent increases than those moving into new properties. Renewal rents rose by 6% over the past year, more than three times the growth rate for newly let homes, pushing the average monthly rent at renewal to £1,263 — £109 less than for new tenants.
The latest Hamptons Monthly Lettings Index revealed that landlords are continuing to raise rents for existing tenants – narrowing the gap between current lease rates and those achievable on the open market. Scotland was the only exception, where rent caps limit increases within tenancies. Every other region saw renewal rent growth outpacing that for new leases.
Despite this recent trend, over the past five years, sitting tenants have generally experienced lower cumulative rent increases than those who moved. Renewal rents rose by 26.5% during this period, compared to a 34% rise for new lets.
London sees decline in new let rents
London recorded the largest disparity in rent increases between new and renewing tenants. While rents for new lets in the capital fell 0.7% year-over-year, marking the second consecutive month of decline, renewal rents climbed by 6.8%.
Rental growth has also slowed in Northern England, where rents rose by 3.5% over the past year, down from 8.4% a year earlier. In the South of England (excluding London), growth dropped to 3.1%, compared to 6.2% the previous year. This convergence suggests a narrowing gap between northern and southern rental markets, according to Hamptons.
Rental stock levels stabilise
An earlier increase in rental supply, which contributed to moderating rental growth, appears to have plateaued. In January, there were 3% more rental homes available than a year earlier, marking the smallest annual rise since August 2022. However, London experienced a sharp 25% decline in available rental stock — the steepest drop nationwide — potentially supporting stronger rental growth in the capital throughout 2025.
Nationally, the supply of rental properties remains significantly below pre-pandemic levels, with 39% fewer homes available compared to January 2019. London’s shortfall is even greater, with stock levels 48% lower than five years ago.
Landlord purchases fall to record low
January 2025 also marked a new low for landlord activity in the sales market. Landlords accounted for just 9.6% of property purchases in Great Britain, the lowest proportion since records began in 2009. This figure dipped below the previous record low of 10.6% set in January 2020.
London experienced the sharpest decline, with landlords making only 7% of purchases last month. Scotland recorded the lowest absolute share of landlord purchases at 4.6%, following the December 2024 increase in the Additional Dwelling Supplement from 6% to 8%.
Market outlook
“The pace of rental growth nationally has likely bottomed out,” said Aneisha Beveridge (pictured), head of research at Hamptons. “There are some signs that growth outside London is slowly picking up again, but we’re unlikely to see it run at the same rate as it has over the last few years. Rather, a squeeze in the number of rental homes on the market has made securing a property more competitive than it has been in recent months.
“What happens to rents on newly let homes tends to play out in the renewal market around 18 months later, so we expect tenants renewing their contracts to face smaller increases in 2025 than they did in 2024. Over the past five years, the lag between the two markets has saved sitting tenants an average of £6,641 each year, a saving which would have been wiped out had increases in renewal rents tightly tracked new lets.
“New purchases by landlords have been depressed by increases in stamp duty rates towards the end of last year and the prospect of tighter regulation in the form of the Renters’ Rights Bill. While purchases by landlords haven’t completely dried up, it’s looking like higher stamp duty rates have reduced the share of homes sold to landlords by between 10% and 20%.”
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