Rent growth slows for new tenancies – but renewal prices soar

The pace of rent rises for new tenancies has dropped, with average monthly payments climbing by just 1.8% in January compared to the previous year, Hamptons reveals.

Its data also shows that this is the smallest rise since October 2020 to mark 18 months of continuous easing.

For tenants signing new leases, the typical cost now stands at £1,372.

However, renters opting to extend existing tenancy agreements have faced steeper hikes, with rents surging by 6% over the past 12 months.

This brings the average renewal figure to £1,263, which is still £109 shy of what newcomers are shelling out.

Hamptons says that landlords are keen to meet the market rates rather than increase rents at a slower pace for loyal occupants.

Pace of rent growth

The agency’s head of research, Aneisha Beveridge, said: “The pace of rental growth nationally has likely bottomed out.

“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.”

She added: “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.”

Properties welcoming new renters

Looking back over the last five years, properties welcoming new renters have seen costs balloon by 34%, outpacing the 26.5% rise experienced by those staying put.

London stands out with the sharpest divide: new tenancy rents dipped by 0.7% year-on-year — the second consecutive month of decline — while renewals jumped by 6.8%.

Renters in the North East, North West and Yorkshire and Humber saw a 3.5% increase, down from 8.4% a year previously.

In the South East, South West and East of England followed suit, with a 3.1% rise compared to 6.2% last year, narrowing the north-south disparity.

Supply dynamics are shifting

Hamptons letting index also highlights that the sector’s supply dynamics are shifting too as rental stock grew by 3% nationwide compared to January 2024 – the smallest annual gain since August 2022.

London, however, bucked the trend with a dramatic 25% drop in available homes, which will probably bump up rents in the coming year.

Nationally, the pool of lettable properties remains 39% below January 2019 levels, with London’s shortfall even steeper at 48%.

Landlord activity also hit a historic low, with only 9.6% of home sales in January 2025 — the first single-digit share since records started in 2009.

London saw just 7.0% of purchases by landlords, while Scotland, reeling from a stamp duty hike from 6% to 8% in December 2024, logged a mere 4.6%.

Ms Beveridge said: “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%.”