Well, an update.
We've basically decided to move, so on Weds night I requested a load of viewings from Rightmove and Gumtree.
Yesterday and this morning I've fielded a truckload of calls; we've got two viewings tonight and 7 in quick succession tomorrow from 10am until about 2pm. All in the same walkable area thankfully!
Prices vary from 525 pcm to 675 - we currently pay £640 for a 2-bed maisonette, no garden. Same area. All are two-double-bedroomed properties (so they say), some just a flat - the more expensive ones are 2-bed terraced houses, or have gardens, etc.
The letting agency got back to me, they are sending a recorded letter to the landlady saying they will not increase our rent, and will offer us a 6 month tenancy renewal BUT with a release clause allowing us to give a month's notice of our leaving at any time.
UNLESS she gets back to them within 5 days. If she does, and kicks up a stink - well we're off anyway! But it's interesting to see what might happen next...