The average new-let rent last month was up only 1.8% compared to 12 months ago, the slowest rate of growth since October 2020.
That’s the verdict from lettings agency Hamptons, which says this is the eighteenth consecutive month that rental growth has slowed, leaving the average tenant moving home in Britain paying £1,372 a month.
Meanwhile, tenants renewing a contract continued to see rents rise much faster than tenants moving into new properties.
The average rent for a tenant renewing their contract rose 6.0% across Great Britain over the last year, more than three times faster than rents agreed on newly let properties. This brings the average rent at renewal to £1,263 per month, £109 per month less than a tenant signing a new contract.
Landlords continue to increase the rent paid by existing tenants in order to close the gap with the value achieved if a new tenant were to move into the property. With the exception of Scotland, where there are caps on rent hikes within a tenancy, every region saw renewal rents rise more quickly than for tenants moving into a new property.
Despite this, in recent years, sitting tenants have generally seen rents rise more slowly than tenants who moved home. Over the last five years, tenants renewing a contract have seen rents rise by 26.5%. This compares to a 34.0% increase for homes where a new tenant moved in.
London has the widest gap in the country between rent increases for tenants moving into a new property (actually down 0.7%) and renters renewing contracts (up 6.8%). This is the second month in a row that London recorded year-on-year falls in rental growth, with average rents on a newly let home down on the same time 12 months ago.
However, it’s not just London where newly let homes have seen rental growth slow. Rental growth has moderated across Northern England (North East, North West and Yorkshire & Humber) too. This has meant that the gap between the pace of rental growth in the North of England and the South (South East, South West and East of England) has been steadily narrowing over recent months.
Over the last 12 months the three regions of Northern England saw rents rise 3.5%, down from 8.4% a year ago. Meanwhile rental growth in the three Southern regions outside London (South East, South West and East of England) (table 1) totalled 3.1%, down from 6.2% a year ago.
The upward trend in rental stock levels, which has been a factor behind cooling rental growth, looks to have come to an end.
Hamptons says there were 3% more homes on the rental market in Britain in January compared to the same time last year, marking the smallest annual increase since August 2022. London has seen a 25% fall in homes available to rent since last year, the largest drop in the country and a factor which is likely to underpin rental growth during 2025.
Longer term, the number of rental homes on the market remains well below pre-Covid levels. Nationally, there were 39% fewer homes available to rent than there were in January 2019. Meanwhile in London, stock levels are 48% below where they were in January 2019, with Central London markets recording the largest falls.
January 2025 also marked the first time landlord purchases fell below double digits. Landlords accounted for just 9.6% of purchases in Great Britain during January, the lowest figure since at least 2009 when our records began. Until last month, January 2020 had previously marked the lowest level (10.6%).
London saw the most significant fall, with just 7.0% of purchases last month being made by a landlord. In the wake of the increase in stamp duty rates (or ‘Additional Dwelling Supplement’) from 6% to 8% in December 2024, Scotland recorded the lowest absolute level of landlord purchases, with just 4.6% of homes sold purchased by a landlord.
