Rent renewals are where landlords are making the most profit

Rent renewals are where landlords are making the most profit

New figures from leading UK estate agent Countrywide have revealed that landlords are increasing the rents on rental renewals at more than double the rate of rental growth for new listings. Whilst there has been a 1% rental price increase across the rental sector for new lettings in the year to August 2018, there has been a 2.8% rise for renewals.

So why such a difference?

There are two schools of thought on this. One is that landlords are keeping new listings lower to entice more tenants whereas they feel more comfortable to raise rates for existing tenants, who may already have started on a lower rent. Two is that tenants are tending to stay in their properties for longer and landlords are having to keep newly listed property prices down due to lower demand.

Homelet, the UK’s largest tenant referencing company, have also revealed their latest rental price figures. These show that the average UK tenant, once you take London out of the equation, now pays £786 a month on rent, which is a 1.3% rise compared to this time last year.

Commenting on the figures, Martin Totty, CEO of Homelet, said: “In contrast to house prices, which show more noticeable cyclical variations over time, especially in areas of the country where the imbalance between demand and supply is more pronounced, UK-wide rents in August increased around 1% compared with both the prior month and the same month last year.

“Our data demonstrates that the rental sector is showing a return to the long-term trend of steady, often below inflation price growth.”